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Prudential shares are back in demand, rising 11½p to 296½p today amid mounting speculation its UK insurance business could be the first target of entrepreneur Clive Cowdery's investment vehicle Resolution.
Word is Cowdery has already approached the insurer with a view to making an offer. Curiously enough, the Pru along with Aviva and Legal & General are already three of Resolution's biggest shareholders, owning about 20% of the company between them.
Resolution raised a £660 million war chest in December with the aim of buying and restructuring financial assets. Last year, it came close to picking up a sizeable stake in Bradford & Bingley, which was later nationalised.
Today's rise in the Pru's shares extended Friday's strong run. But as one trader said: "Last week, you couldn't give Pru shares away when they stood at 250p."
Shares generally set about clawing back some of last week's hefty losses, with investors pinning their hopes on gains in New York this afternoon.
But blue-chips were unable to maintain the early pace, and the FTSE 100's lead was pared back to 14 points at 3903.06 after it briefly touched 3959.98.
Financials made much of the running after reports the US government may be about to take a 40% stake in Citigroup. The UK Government is this week expected to create its own bad bank, which will provide a £500 billion dumping ground for toxic assets.
Royal Bank of Scotland rose 3.1p to 22.4p amid claims it will soon be split into two divisions. Lloyds Banking Group put on 4.1p to 60.4p ahead of results on Friday. Aviate Global reckons the shares could be worth up to 300p if the company is not fully nationalised - or nothing if it is. Life assurer Friends Provident added 3.9p at 77.5p while rival Legal & General gained 3.5p at 38.3p.
On AIM, Indago Petroleum leapt 13¾p to 26¼p after settling its Jebel Hafit joint venture insurance claim in Oman. The claim relates to a blowout at the Al Jariya well a year ago. Its share of the payout will give it a cash balance of $38 million (£26 million).
ITV hit a record low of 23½p, down 1p, ahead of results next month. Deutsche Bank expects profits to be well down, and the outlook for advertising to remain tough. It has cut its target from 25p to 22p.
United Utilities, 2p better at 526p, has been a poor performer of late, but Cazenove says the shares appear good value for money, and has raised its rating from underperform to in-line. The broker says UU has been the worst-performing UK utility stock, having dropped from 761p since last summer.
The water sector has been plagued by uncertainty surrounding the forthcoming regulatory review as well as the rising cost of borrowing, lower volumes, increased pension deficits, deflation and rising bad debts.
