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Shares on the London stock market soared again today, breaching the 5000 level for the first time since September last year.
Sentiment was cheered by a steady trickle of positive corporate news, including another big oil find for BG Group, up 36p at 1092p. All the evidence suggests that we are over the worst of the recession and a new wave of corporate takeovers may be on the way. The FTSE 100 index briefly hit an intra-day high of 5001.51 before paring back its lead to 44.84 at 4992.18.
Wall Street posted modest gains this afternoon with investors' appetites tempered by news of a decline in weekly department-store sales. The Dow Jones rose 23.81 to 9521.15.
Among the star performers were holiday operator Thomas Cook, up 13.3p at 247.5p and British Airways, which extended its recent rally with a rise of 10.2p to 211.3p as the City pinned its hopes on an early conclusion to the proposed merger with Spain's Iberia.
Bank of America Merrill Lynch scoffs at suggestions that Lonmin's 25% shareholder Xstrata will launch another bid for the platinum producer when the Takeover Panel's 12-month cooling-off period ends next month.
Lonmin has certainly been a strong market of late, with the shares having come up from 1361p since last week alone. Today the price ran into profit taking, trading 54p lower at 1658p. That compares with the 3300p a share Xstrata offered last October. The bid was rejected by the Lonmin board and City speculators have convinced themselves that Xstrata, up 19½p at 900p, will launch a fresh bid now that its proposed merger with Anglo American, 34½p up at 2071½p, looks like being aborted. Word is Xstrata has already instructed its bankers JPMorgan and Deutsche Bank to make a feasibility study of a new bid.
But Bank of America Merrill Lynch seems to think the shares have run far enough and has cut its rating on the shares from buy to neutral. Merrill says its buy rating on Lonmin was based upon the successful restructuring of the business and a positive outlook for platinum prices. The restructuring continues and the shares have already reached the broker's target level, fuelled by takeover talk. But Merrill insists that another bid by the Anglo-Swiss mining giant is less than certain, which has led it to downgrade its rating on the shares to neutral. If a bid does not materialise by the end of the time limit on 2 October, then Lonmin shares may prove vulnerable to a sell-off.
Mining shares generally rallied from opening falls as they extended their recent run. Randgold was the exception, falling 51p to 4303p as the gold price dipped back below $1000 an ounce, and Rio Tinto put on 20p at 2572p.
Note the strength of Yell, up another 11p at 75.8p. Shares in the Yellow Pages telephone directories publisher have come up from 22½p since July, which is surprising in itself. Yell is probably one of the heaviest shorted stocks in the market place. It would appear that stock market bears are struggling to shut down their open positions. The performance of the shares has naturally led to claims that the group may take advantage of the situation to launch a rights issue. Why not? The extra shares would enable the bears to get out of jail, and those punters that bought them when they were changing hands at 643p more than two years ago will be able to start averaging out their losses.
Commercial property prices are forecast to continue falling, but at a much slower pace than of late, says the Investment Property Forum. Shares of the big real estate investment trusts and property developers responded positively. Hammerson rose 12.1p at 427.4p and Land Securities added 15p at 642p, Liberty International 10½p at 534½p and British Land 14p at 502½p.
Pursuit Dynamics leapt 25p to 132p after raising £4 million by way of a placing. Botswana-based copper miner African Copper has recommenced operations at its Mowana Mine. The shares responded with a rise of 1½p at 8¾p. Ambrian has resumed coverage of Kalahari Minerals after its recent fundraising with a buy rating and a 219p target. Last week, Kalahari, up 3¼p at 197½p, raised £20 million. Some of that money will be used to take up its allocation in the Extract Resources rights issue, after which Kalahari will hold 39% of the shares.
