Bid hopes drove the mood around Rightmove, the online property website, whose shares spiked as the bulls charged in on signs of deal activity in the wider sector.
The stock rose by as much as 12.6 per cent at one point in the morning, with traders citing the read-across from a bid for its continental peer Seloger.com. Germany's Axel Springer pounced on the French property website with a €34 per share offer, valuing the business at more than $700m. The news sparked hopes of a similar move for Rightmove, which was swiftly mentioned as a possible target for Daily Mail & General Trust, which is already active in the online property space, and private equity buyers. Aided by the news from Europe, the speculation left Rightmove more than 4 per cent or 32.5p better off at 740p, while DMGT ended the session at 490.3p, down 1.4p.
Overall, the markets were higher ahead of this weekend's finalisation of new banking capital rules. The FTSE 100 was 7.5 points ahead at 5,501.64, while the mid-cap FTSE 250 index ended 76.08 points firmer at 10,401.78 last night. All eyes were on the Basel committee on banking supervision, whose oversight body of central bankers and international regulators is due to agree new banking rules on Sunday.
The agreement will dictate the amount of capital that lenders need to maintain as a cushion against unexpected losses. Sunday will also see a decision on the timespan that banks will have to comply with the new rules, which are meant to stave off a repeat of the recent financial crisis. Traders were broadly confident on UK lenders, reasoning that the wave of rights issues and capital injections seen over the last two years meant that the sector was unlikely to be wrongfooted by the new rules.
That said, an undercurrent of nervousness was evident in the day's movements, with the state-backed groups outperforming their peers in the private sector. Lloyds was the strongest, gaining 0.95p to 75.62p, while Royal Bank of Scotland rose to 48.53p, up 0.38p. In the wider sector, HSBC and Standard Chartered, on the other hand, failed to make any headway, easing by 0.1p to 661.5p and by 17p to 1,898p respectively.
Barclays was the weakest of the lot, shedding 4.25p to 319.1p, after Citigroup abandoned its "buy" view. "We do not believe that the shares are likely to outperform significantly over the near to medium-term as both the operating environment facing the group's key profit driver (Barclays Capital) and the company's performance metrics have deteriorated recently and may, we believe, continue to deteriorate over the next 6-12 months," the broker said, adopting a "hold" rating.
Elsewhere, Icap led the blue chips, gaining 16.9p to 454.5p, after Evolution began coverage with a "buy" stance. Analysts Bill Barnard and Michael Sanderson said that while the inter-dealer broker's recovery had been hampered by the "misadventure in cash equities" – back in March, Icap unveiled plans to scale back its troubled stockbroking business – the company was set for a period of growth as volumes rise and it benefits from investments in electronic and post-trade services.
"We feel Icap's underlying risk profile is lower than is often perceived, and increasing regulatory clarity could be a catalyst, rather than a threat," they said, setting a 505p target price on the stock. Smaller peer Tullett Prebon was also strong last night, rising by more than 3 per cent or 11.8p to end the session at 396.5p.
On the downside, parts of the mining sector paused for breath as copper prices eased in response to renewed worries about the prospect of tighter monetary policy in China. The concerns surfaced ahead of the release of key Chinese economic data on Saturday. There were worries that a spike in the country's consumer price index could spur tightening, which in turn could trigger a slowdown in growth in the world's leading metals consumer.
The jitters bore on the likes of Anglo American, which fell to 2,506p, down 31p, and Rio Tinto, which was 10p lower at 3,530p. Lonmin was among the risers, shaking off the worries to book a 12p gain to 1,662p.
Further afield, the rumour mill remained active around Hays, the recruitment group, which in recent days has been mentioned as a possible target for Adecco or Randstad. The stock was 1.8p higher at 106.9p. In the utilities sector, British Gas-owner Centrica was 2.7p lower at 343.4p as chatter of bid interest from Gazprom began to fade.
Goldman Sachs boosted the mood around United Business Media, the events and publishing group, which rose by 14p to 594p after the broker raised its target for the stock to 750p from 665p. In a wider-ranging sector round-up, the broker also reiterated its positive view of Reed Elsevier, which was 1p lower at 536p, and Informa, which was 11.8p ahead at 423.2p.
"UBM is our top pick, given its high exposure to events and emerging markets, and low government exposure," Goldman said, repeating its "buy" view on all three. The broker is less keen on Pearson, which fell by 10.5p to 999.5p after Goldman reinstated coverage with a "neutral" stance.
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