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A brief flurry of speculative buying saw shares of Dana Petroleum strike a high for the day of 1470p as talk whizzed around the Square Mile that a bid was on the way.
The mutter from the gutter claimed Dana could soon be on the receiving end of an offer worth 1800p a share, still some way short of the year's high of 1900p, which would give it a price tag of £1.6 billion.
That would be loose change for the likes of French oil giant Total, which is seen as a potential bidder. The German utilities giant RWE may also make a move, say the gossips. It already has interests in the North Sea and is seen as a counterbidder for Venture Production, up 2½p at 765½p, should Centrica eventually make a move.
Dana insists it is not in bid talks, which prompted the shares to pare back their lead to trade 89p higher at 1333p as more than 3.4 million changed hands in a notoriously thin market. Average daily turnover in the shares is 800,000 and the biggest trade today was for 42,885. Talk of a bid for Dana has done the rounds before but it should be worth pointing out that the price of crude is on the rise again, having flirted with the $70-a-barrel level earlier this week. As brokers say, a rising oil price makes these sort of deals far more attractive.
Last month Dana raised £56 million by way of a placing of 4.34 million shares at 1290p just days before plugging its Eitri prospect in the North Sea, which it shares with American oil giant ExxonMobil. Even so, Dana is not short of admirers. UBS began coverage of the shares earlier this week with a buy rating and a 1580p target.
Shares generally clawed back early losses with the support of a firm start to trading on Wall Street this afternoon. The FTSE 100 index rallied 22.71 to 4301.17 while in New York the Dow Jones benefited from a better-than-expected rise in business activity, according to the Philadelphia Federal Reserve survey, to post a rise of 66.89 to 8564.07. But investors appeared nervous before tomorrow's triple-witching hour, which sees the expiry of the June series of traded options and futures.
Anglo-Swiss mining giant Xstrata set about reversing yesterday's losses with the price adding 18½p at 662p. Citigroup and Morgan Stanley have been pushing the shares. Citigroup has raised its rating from hold to buy, while Morgan Stanley has already moved from equalweight to overweight with an 885p target. No doubt both brokers have also weighed up the benefits which would accrue from a possible takeover of rival Anglo American, 30p better at 1604p. Whispers concerning the fate of Anglo American have swirled around the City for some time. Several major shareholders have already made known they would favour a takeover and have lost faith AA's management.
But Rio Tinto slumped 50p to 2104p amid growing fears its proposed iron ore joint venture with rival BHP Billiton, 13p better at 1388p, may be scuppered because of opposition from 11% shareholder and spurned financier Chinalco. Deutsche Bank has cut its target for Rio from 3235p to 2672p.
A profits warning left Mouchel nursing a loss of 76¾p at 157p. The public sector and utilities outsourcing specialist warned its performance for the current year would come in below expectations and blamed its rail interests and the Middle East, which would also impact on 2010.
Infrastructure support companies are seen as recession-resistant based on long-term revenue streams. The news sent a shudder through the sector with Babcock International losing 6¾p at 480¾p, and Carillion 12½p at 253¾p.
GKN rallied from an opening fall to trade 2½p better at 121½p while brewer Marston's lost 21p at 119¼p after both companies announced plans to tap shareholders for extra cash. Altium Securities responded by slashing its target for Marston's from 160p to 100p.
Retailer Next fell 50p to 1412p. Finance director David Keens has been forced to sell 30,737 shares (£429,000) to settle his divorce. It takes his holding down to 120,700 shares.
