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Could takeover talks between the Brazilian mining giant Vale and the Anglo-Swiss outfit Xstrata soon be back on again?
That was the speculation doing the rounds in the Square Mile this morning after it emerged Vale had raised more than £1 billion via the issue of two mandatory convertible bond issues which mature in 2012.
The bonds will convert into American depository receipts, equivalent to one ordinary share in Vale.
Dealers were left scratching their heads as to why Vale would need the extra cash. It already has £7.3 billion on deposit at the bank which would make a useful down payment on Xstrata, up 15¼p at 622p.
But Vale may have to raise considerably more if it wants to agree terms with Xstrata and its 37% shareholder Glencore, the Swiss commodities trader.
Talks between Vale and Xstrata broke down in March last year.
It is thought the Xstrata board and Glencore wanted more than the £45 billion offered by Vale with just over half in cash.
But a subsequent sell-off in the Vale share price made the terms less attractive.
Xstrata's stock-market price tag has since shrunk to less than £20 billion and it is currently pursuing a bid for Anglo American, 35½p firmer at 1664p, which has already been rejected.
The rest of the London market clung onto modest gains, underpinned by a rally among the miners in the wake of yesterday's sell-off.
The FTSE 100 index advanced 3.57 to 4198.47, despite falls on Wall Street where the Dow fell 72.17 to 8252.70.
But investors are not out of the woods just yet. Christian Heger at HSBC Global Asset Management in Germany warns European stock markets are only half-way through a 10% to 15% downward correction from recent peaks reached after the steep rally from the low point on 3 March.
He says the slide will continue until August or September, although share prices could start to rise again in October.
Bernstein has taken a knife to price targets for the big European supermarkets.
It has trimmed Tesco, 2.6p better at 351.1p, from 450p to 440p, but repeated its outperform rating.
It has also lowered Wm Morrison, up 5p to 245¼p, from 290p to 260p with a market perform rating.
Bank of America Merrill Lynch is more upbeat about prospects for Morrisons.
It has upgraded the shares from underperform to buy and claims recent selling has been overdone.
The stock retains strong defensive credentials.
A pick-up in forward sales at Persimmon, one of the UK's biggest housebuilders, was greeted with a rise of 21¾p at 384¾p.
Other builders in the bombed-out sector responded positively to the news with Bovis Homes jumping 20¼p to 409¾p, Barratt Developments 7½p to 156¾p, and Redrow 9¾p to 213p.
Omega Insurance firmed ½p to 127¾p after graduating from the junior market AIM to a full listing.
Bob Holt, chief executive of social housing and domestic care services group Mears, is in the pink these days. Despite the recession, contracts from the public sector keep rolling in.
Yesterday it unveiled new work worth £70 million, bringing the total of new deals struck this year to £175 million.
Holt does not anticipate any slowdown in public-sector spending so it seems strange that the shares, 1p cheaper at 222¼p, are proving reluctant to respond to the company's good fortune.
Dealers say a large bear position has been built up in the shares which could soon find itself being squeezed, especially if Mears attracts a bidder.
Venture Production firmed 8p to 820p still waiting to see if Centrica, down 1½p at 220½p, chooses to make a bid before next week's deadline set by the Takeover Panel.
