Man Group gets vote of confidence

Man Group was a gainer on Monday as the FTSE 100 held at an 18-month high. The hedge fund manager rose 2.3 per cent to 251½p after house broker Merrill Lynch dismissed concerns about its benchmark fund.

The algorithm-powered AHL fund last year registered its first ever annual decline. Merrill argued that investors should be taking a longer view. “There is no reason to assume AHL is broken,” Merrill told clients. “Our view is that the current behaviour of AHL is relatively typical of the strategy in a trendless market.”

Recent weakness comes after AHL was wrong-footed by trends in the bond and currency markets. Merrill said the fund had been taking positions too early, but added there was no benefit to using historical data in changing the algorithm.

Last year was, in short, “just one of those things” and should not eclipse AHL’s strong record, analyst Philip Middleton said. He repeated “buy” advice with a 390p target, helping lift Man shares by 2.3 per cent to 251½p.

The FTSE 100 registered its sixth gain in seven sessions, with the index inching up 6.96 points, or 0.1 per cent, to 5,606.72.

Nomura “buy” advice helped lift Legal & General by 2.7 per cent to 78¼p ahead of the insurer’s full-year results later this month. These should show a strong second-half performance and improved disclosure, while the threat of European legislation forcing tighter solvency standards looked to be receding, the broker said.

Prudential eased 0.4 per cent to 518p even after it brought forward plans to list on the Hong Kong Stock Exchange to help shore up its $21bn rights issue.

Merrill Lynch said Prudential’s chances of getting shareholder approval for its purchase of AIG’s Asian arm looked finely balanced, with the deal likely to be voted down if the stock came under another wave of sustained pressure. It saw the shares as a “win-win” whether the bid succeeded or failed, but expected them to remain range-bound until the rights issue was launched.

Among the banks, Standard Chartered rose 0.9 per cent to £17.76 after Société Générale took the stock off its “sell” list.

Barclays , which was subject to gossip about a China-backed fundraising, added 1.1 per cent to 345p. Dealers also noted that Barclays’ weight in FTSE indices would increase slightly from Tuesday to reflect the recent exercise of warrants.

A rebound lifted Resolution to the top of the blue-chip risers, up 5 per cent to 72p, as a stock overhang cleared. Nevertheless, Resolution looks certain to be relegated from the Footsie in an index review that will be framed on tonight’s closing prices.

London Stock Exchange , up 0.4 per cent to 710½p, was also below the relegation cut-off point, while Thomas Cook , down 1.4 per cent to 236½p, was just above it. Home Retail Group added 3.4 per cent to 267½p ahead of results on Thursday, helped by UBS “buy” advice.

AstraZeneca drifted 1.4 per cent to £29.53 after its Recentin experimental cancer drug failed in a late-stage trial. AstraZeneca management reconfirmed long-term sales and earnings guidance. However, analysts said the failure removed a potential source of upgrades and made the group’s target of up to $34bn in sales in 2014 look increasingly ambitious.

Tullett Prebon was the sharpest faller among the mid-caps, losing 4.9 per cent to 208¾p, after the inter-dealer broker posted in-line earnings for 2009 and pointed to a tough start to the year following staff defections. Icap , its larger peer, was off 1.4 per cent to 359p.

Forth Ports jumped 25.6 per cent to £14.03 after disclosing late on Friday that it had rejected two takeover approaches from a consortium of leading shareholders at a top price of £13.40 per share. “We believe that an offer of at least £15 would be needed to make a deal succeed,” said UBS.

Gartmore closed up 0.3 per cent to 190p ahead of its maiden full-year results due this morning. Dealers noted a very wide range to analyst forecasts, in spite of the fund manager providing nine-month figures in its flotation prospectus.

Africa talks lift Dominion

Dominion Petroleum was marked 11.9 per cent higher to 5.8p on the back of reports that ExxonMobil was in advanced talks to buy into Statoil’s Block 2 prospect off the coast of Tanzania, write Bryce Elder and Neil Hume. Dominion, which recently raised £33m through an issue of new shares, is looking to sell its interests in its Tanzanian assets. It has already struck a deal with France’s Maurel & Prom for its onshore assets and Exxon’s apparent interest in the east African country should make it easier to find partners for its offshore block. Victoria Oil & Gas climbed 17.6 per cent to 4.2p amid talk the explorer is set announce a positive update from one of its prospects, while Circle Oil moved up 4.5 per cent to 35p on rumours it would soon announce the Al-Amir SE-5 appraisal well in Egypt had been successfully completed and production tested. Delta , the maker of road barrier safety systems which recommended a 185p-a-share cash offer from a US rival last week, rose 0.1 per cent to 191¼p after full-year results beat expectations. But hopes that a counterbid might emerge were knocked by a declaration from Schroders, one of the company’s biggest shareholders, that it had sold 1.4m shares at 190p. E2V Technologies , the electronic component maker, which warned on profits last week, advanced 1.3 per cent to 39p after Keith Attwood, chief executive, and Charles Hindson, finance director, declared the purchase of 132,338 and 500,000 shares respectively. Cineworld added 2 per cent to 176½p ahead of Thursday’s annual results, which Altium Securities thinks could trigger upgrades. However, analyst Greg Feehely said he could not turn positive on Cineworld until Blackstone, a private equity backer, sold its 20 per cent holding. Tarsus , the exhibitions and conferences group, rose 8.8 per cent to 123p after full results impressed.