Arm Holdings avoided a sell-off among London stocks on Wednesday on optimism that it would gain a foothold in a new market.
Arm shares crept higher by 0.2 per cent to 508.5p after Dell said it had been developing Arm-powered servers for the past two years in response to customer demand.
With Hewlett-Packard having said it was supporting Arm, the UK chip designer has public support of more than 50 per cent of the market, said analysts.
UBS expected Arm-powered hardware on sale by the end of the year, which it said may help encourage the company to improve shareholder returns.
“While to an extent already in forecasts, we see this as another milestone in Arm’s server market entry,” said the broker.
About 12m servers are sold each year and Arm can capture about a quarter of that market by 2016, The Benchmark Company estimated.
Assuming royalties of 2 per cent per unit, the server market could generate an additional $24m of sales for Arm, it said.
The wider market broke a four-day winning streak as the cost of insuring against default on Spanish sovereign bonds rose to a record.
The FTSE 100 dropped 1.7 per cent, or 93.86 points, to 5,297.28.
Miners tracked metals prices, which hit a seven-month low after China indicated that it had no plans to launch stimulus measures on the scale of 2008’s programme.
ENRC closed down 6.6 per cent to 434.6p, Vedanta Resources lost 5.4 per cent to 940.5p and Kazakhmys fell 4.3 per cent to 680p.
Xstrata faded 1.9 per cent to 939.4p amid speculation its buyout by Glencore International may be voted down. Glencore would not be able to use its 34 per cent stake in Xstrata in the shareholder vote to approve management’s incentive scheme, Jefferies noted.
Excluding Glencore’s stake, 65.6 per cent of Xstrata shareholders opposed the approval of directors’ remuneration package at its annual meeting, it highlighted.
Glencore closed 2.6 per cent weaker at 345p. Separately, Qatar said it had raised its stake in Xstrata to 8.86 per cent.
BG Group slumped 4.6 per cent to £12.24 after it said Frank Chapman, chief executive, had sold 368,185 shares at an average of £12.85 apiece. Other energy stocks mirrored a 3 per cent drop for crude oil with Tullow Oil off 3.3 per cent to £14.27 and Royal Dutch Shell B shares down 1.2 per cent to £20.59.
Man Group, the hedge fund manager, lost 3.4 per cent to 71.7p ahead of its relegation from the FTSE 100.
Next week’s extended bank holiday in the UK meant the FTSE’s reshuffle would be framed on Friday evening’s closing prices rather than the scheduled cut-off point of Tuesday.
Defence contractor Babcock International, which rose to 0.4 per cent to 859.5p, was expected to be promoted to the blue-chip index as part of the review.
Stocks due for relegation from the FTSE 250 included Kesa Electricals, up 1.1 per cent to 49.5p, and Daily Mail and General Trust, down 1.9 per cent to 387.9p,
With defensive stocks finding favour, Severn Trent rose 2.5 per cent to £17.06 after the utility proposed a £150m special dividend. The payout, equivalent to 63p per share, was at the lower end of expectations.
Essar Energy jumped 21.9 per cent to 141.8p on reports that a governmental committee in India had provisionally cleared the company to begin coal mining at its Magan power plant.
Essar Energy said it was yet to receive official notification of the government’s ruling and cautioned that the final decision would be taken by the Indian cabinet.
Centamin rose 4.1 per cent to 64.3p after the gold miner set out a five-year plan to expand production from its Egyptian facility.
Booker, the groceries wholesaler, rose 10 per cent to 87p after announcing a cash and shares deal to buy Metro’s UK Cash & Carry business.
“We believe that, given the strong reputation for acquisitions and turning struggling businesses around, Booker will be successful in improving the operating performance in the coming years and this acquisition will ultimately help provide the next leg of growth to the Booker story,” said house broker JPMorgan Cazenove.
Among small caps, Silverdell rose 9.9 per cent to 11.1p after the asbestos removal specialist said it had bought sector peer EDS Group. Silverdell saw the deal as earnings enhancing.
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