There was further evidence of investors rotating into blue chip stocks from the mid caps in London on Tuesday as the feverish bid speculation of the past few weeks abated.
The FTSE 100 rose 0.3 per cent at 5,058.9 while the mid-cap FTSE 250 index for once underperformed, falling 0.1 per cent to 7,363.3. Volume was moderate with 2.8bn shares changing hands.
David Buik of spread betting service Cantor Index said the market seemed strongly underpinned but there was “evidence of investors temporarily deserting mid-caps for the FTSE 100”.
One trader said the mid-cap sector was pausing for breath after “the capitulation of the bears” last week. “There was panic buying throughout the 250 from hedge funds not wanting to be caught out by any bids,” he said.
The main focus of attention was on the bluechips yesterday. Cable & Wireless rose 2.5 per cent to 133.25p as it pleased investors by announcing late on Monday it had resumed its share buyback programme for the first time since December 7.
Nevertheless, the 500,000 shares C&W bought, via its broker Hoare Govett, was the smallest block of shares it has repurchased since announcing plans for a £250m share buyback in November.
National Grid Transco gained 2 per cent stronger to 544.25p after a bullish comments from Credit Suisse First Boston. The broker upped its price target to 593p from 550p, encouraged by the improved outlook for UK regulated assets and its US operations.
Scottish Power and United Utilities also were stronger, up 2.2 per cent to 446.75p and 1.9 per cent at 662.5p respectively.
Reuters lost 1.3 per cent to 407.75p as traders made a few late bets ahead of Wednesday’s fourth quarter results from the global information provider.
BG Group rose 1.9 per cent to 395p after the gas and oil company raised its production targets and earnings guidance for 2006. It also issued an upbeat assessment of its longer terms prospects. See more on BG Group results
Cox Insurance steadied at 81.5p amid recent disquiet over the progress of takeover talks disclosed early last November. The motor insurer said at the time it had received “several approaches” at “material premium” to its then share price. On the day of the disclosure of the talks on November 8, the shares rose 18.5p to 83.5p. The shares later peaked at 93.5p in January before sliding.
Mining stocks were higher as investors anticipated strong sets of earnings from the index heavyweights.
BHP Billiton, due to report on Wednesday was up 2.1 per cent at 693.5p, while Rio Tinto was up 1.7 per cent at £17.16p. There was also talk that South Africa would also soon indicate increasing demand for raw materials.
Tate & Lyle advanced 1.9 per cent at 506p after ABN Amro declared that the stock was still undervalued despite a 62 per cent rise in the company’s share price since last August.
Julian Hardwick, ABN Amro analyst, said the market was attributing a value of 160p a share for Sucralose, the ingredient in its sugar substitute brand Splenda. This was well below ABN’s fair value range of 225p-275p per share.
Mr Hardwick added that positive reaction to recent news that Splenda would be used in Diet Coke highlighted the sensitivity to further news flow of customer take-up.
Sage Group rose 1.3 per cent to 211.5p after the accountancy software provider announced the acquisition of Symfonia for £10.3m. Symfonia is a Polish accountancy software provider for small to medium-sized with over 35,000 customers. For the year to March 31, Symphonia reported revenues of £4.4m and operating profits of £0.8m. The deal extends Sage’s coverage into the Polish market for the first time.
Carnival rose 0.4 per cent to £31.69 after the world’s largest cruise operator said the industry had entered the ‘wave season,’ in January, a period of higher booking levels than during the rest of the year. Bookings were running slightly higher than during the same period last year and pricing was significantly higher.
Carnival raised its guidance for net revenue yield growth for 2005 to an increase of 4 to 6 per cent growth from 3 to 5 per cent previously.
Burren Energy rose 0.8 per cent to 477p as the oil exploration company announced the acquisition of a 26 per cent stake in Hindustan Oil Exploration company for $26m.
HOEC is India’s only publicly quoted oil & gas company outside the state controlled sector, with a market capitalisation of US$138m and this is Burren’s first acquisition since its flotation in December 2003. Burren can increase its holding to 51 per cent through an option and tender offer.
“HOEC’s portfolio of projects has considerable potential and can act as a platform for Burren to build a substantial business in an energy-hungry but under-explored country” said Richard Slape of Seymour pierce who re-iterated a “buy” recommendation.
Premier Oil rose 3.9 per cent to 608p after a positive drilling update from its operations in Mauritania.
EMI was 1.2 per cent higher at 239.5p on talk that the music group’s shares were due for a further correction after recent weakness. It was also revealed that Wellington Management Company, a long-term investor in the UK media sector, upped its stake in EMI to 6.4 per cent from 5.3 per cent.
There was further speculation of another bid appearing for high street retailer Woolworths, up 1 per cent at 50.5. However traders were sceptical, pointing out that Woolworths’s share price was still at the bottom of the 50-55p range at which it rebuffed an approach from venture capital firm Apax Partners.
Paragon, the mortgage lenders, was down 3.4 per cent at 438p after Numis Securities advised clients to take some profits in the group in the wake of soft industry data from the Council of Mortgage Lenders.
Among the smaller companies, Ottakar’s fell 4.7 per cent to 281.5p as the UK’s second largest specialist book retailer announced an operational management reorganisation including the departure of its marketing director. Amid concern that post-Christmas sales have been under pressure, Seymour Pierce said Ottakar’s could be a takeover candidate for Barnes Noble or Borders.
Proteome Sciences fell 6.7 per cent to 69.5p after Evolution Securities warned that the biotech company could run out of cash by the middle of the year in the absence of any deals. Having promised five deals following the AGM last August, no agreements have been signed. Evolution said some form of fund-raising was likely in the near future and reduced its price target to 70p.
PetroWorld soared 74.5 per cent to 57.5p amid heavy trading volumes of 2.4m shares (20 per cent of the issued shares) but the resources sector investment company said it was not aware of any reason for the share price rise. PetroWorld’s shares have risen almost 326 per cent since its flotation in late January.
Having risen by 38.9 per cent to 6.25p yesterday, Bullion Resources was suspended after it said was in advanced talks which, if completed, would amount to a reverse takeover of the company which explores and develops gold properties in South Africa.
Wolfson Microelectronics dipped 0.9 per cent to 172p despite the US International Trade Commission clearing the seminconducter supplier of allegations of two patent infringement made by Cirrus Logic. The legal proceedings in San Diego are ongoing.
Universal Direct Group jumped 35 per cent to 27p after David Wright was appointed executive chairman following his recent purchase of a 17 per cent stake in the reseller of electrical discounted goods. Previously executive chairman of Incepta until October 2002, Mr Wright said significant acquisition opportunites were being explored.
A positive drilling update from its offshore Mauritania drilling programme helped the oil exploration company Hardman Resources gain 10.3 per cent to 84.25p.
Spiritel rose 9.4 per cent to 17.5p as the telecoms services business signed a voice call termination agreement with Level 3 Communications, the communications and information services company.
Halladale Group dipped 1.1 per cent to 129p as the property company announced two retail acquisitions (warehouse units) in Aberdeen and Sheffield for £11.85m.
Central African Mining and Exploration rose 6.1 per cent to 13p amid heavy trading volume of 7.7m shares led by insitutional buying.
Tiger Resource Finance rose 24.7 per cent to just under 3p after the mining investment firm realised a £2.3m profit from the sale of Cambrian Mining shares.SectorGuard rose 6.5 per cent to 4p as the security specialist said it was in talks to acquire SectorAlarm, the electronic security systems suplier.