Friday 5 September - 4pm update

RSA Insurance provided one of the few beams of sunshine in a gloomy market, jumping 7.2p to 165.5p on rumours that another foreign predator, this time Germany's Allianz, is sniffing around.

Although the German finance house refused to comment, earlier this week it agreed to sell its Dresdner unit to Commerzbank, and traders mentioned talk of a possible bid of 225p.

RSA has already benefited in the past week from rumours of bid interest from Zurich Financial Services, and volumes were high with 32 million shares changing hands by mid afternoon — against an average whole-day of 21 million.

Falling commodity prices triggered a sell-off among miners while banking stocks led by Barclays, down 11½p at 317¾p were also out of favour. The rest of the blue-chip index could not defy the drag from two such influential sectors, nor the impact of dismal employment figures in the United States.

The FTSE 100 slid 67.9 to 5294.2.

In the US, non-farm payroll figures showed American unemployment had risen to its highest level for almost five years. Another 84,000 jobs were lost in August, mostly among the crucial 25 year-old and up age group, taking the total unemployment level to 6.1%, the highest since September 2003. In New York, the Dow Jones dived a further 95.1 points to 11,093.1 meaning leading US shares have given up almost 4% in value over the last five days.

Lloyd's List publisher Informa fell 24¾p to 389¾p as investors reacted with dismay to the board's rejection of a £1.9 billion bid from a consortium of private-equity companies. The 450p-a-share offer is 10% less than a 506p indicative offer in July by the venture capitalists. Informa said the new offer significantly undervalues the firm. Numis analyst Lorna Tilbian reckons 506p would have secured the deal and believes a compromise price between 470p and 480p could also win the day.

J Sainsbury was off the shopping list after a Deutsche Bank downgrade to sell from hold. Deutsche analyst James Collins was at pains to point out that he wasn't blaming Justin King.
But Sainsbury's is, he believes, stuck between a rock and a hard place. It will be hit by consumers downgrading to competitors with a better “value” image and when food inflation declines growth will not recover. The shares dipped 11½p to 336p while Deutsche has lowered its target to 310p from 335p.

Broker Cazenove is urging clients to take another look at oil following the recent plunge in prices. Analyst Fred Lucas says the simple sector-to-oil price ratio has “collapsed.” He calculates the current share prices reflect a long-term oil price of just $50. Lucas reckons $80 a barrel is a more appropriate level.

Caz believes investors will start returning to “relatively low-risk quality names” in the next few weeks. Its top five picks include BP, up 6p at 511½p, and BG, 17p up at 1072p. It is reiterating its outperform rating on both stocks. Enterprise Inns fell 8p to 271¼p, battered by the gloomy warning from JD Wetherspoon, which merely compounded a week of generally miserable news from the pub sector.

Animal feed and fertiliser group Carr's Milling soared 25p to 682½p as it upped its profit guidance for the fourth time in the last four months. In addition to strong trading the group will benefit from a number of one-off factors, including currency gains and early buying.
Pre-tax profits are now due to come in at no less than £12.5 million compared to last year's £5.5 million and the dividend will rise 21% to 19p. Carr's has also raised £2.7 million via a placing of 410,000 shares at 660p.

AIM-listed Churchill Mining added 7½p to 66½p after it said it had discovered three times as much coal at the East Kutai site in Indonesia than it had estimated. It thinks it can dig out 1.4 billion tonnes, compared to the 500 million previously suggested, and hopes to start production by the end of 2009.