Market Report: InterContinental Hotels Group is on the march

InterContinental Hotels Group is on the march, with the tipsters betting the hotel chain could pay investors for staying.

Bank of America Merrill Lynch upgraded IHG yesterday as it predicted the company could hand up to $1.3bn, or 14 per cent of its entire market capitalisation, back to shareholders over the next year. IHG recently offloaded a hotel in Paris and the bank reckons more sales could be on the way, freeing up cash for a payday. IHG jumped 55p to 2650p.

After a record-breaking, data-heavy week, traders were in no mood to explore uncharted territory and the FTSE 100 closed down 3.07 points at 6946.66.

Royal Bank of Scotland tumbled 19.4p to 367.2p as Societe Generale and JPMorgan both downgraded it on the back of its poor results. Associated British Foods meanwhile enjoyed an upgrade from Citi thanks to the “best-in-class performance” of Primark. ABF climbed 76p to 3125p.

FT-owner and education group Pearson vowed to return to growth as it ended its two-year restructuring. Pearson, up 24p at 1420p, named Penguin Random House’s finance chief Coram Williams as its new finance boss.

FirstGroup drove 4p higher to 105.4p after Goldman Sachs tipped the transport group as a potential takeover target.

Troubled oil and gas explorer Afren tumbled 1.01 to 8.6p amid reports bondholders want to take control in exchange for a much-needed cash injection. The business had a $50m loan payment due yesterday.

Eye-testing machine manufacturer Optos leapt 81p to 341.5p after announcing a £259m takeover with Japan’s Nikon. The rise about the 340p-a-share offer price suggests speculators could be hoping for an improved offer.

Green power specialist Intelligent Energy climbed 7.25p to 135.25p on AIM after acquiring portable fuel cell maker Société Bic for $22m and announcing a near eightfold increase in first quarter revenue.

Baobab Resources jumped 1.25p to 5.37p on AIM as the Mozambique-focused iron group announced a deal to sell to major shareholder African Minerals & Development in a deal that values it at £20.5m.