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Life insurers were shining again today as bid rumours continued to ignite the sector and Deutsche Bank gave a glowing verdict on its prospects.
Legal & General was once again one of the index's biggest winners, despite one of its rumoured potential bidders — Italian giant Generali — denying today that it was circling.
There were still mutterings of a bid from Australia's AMP and even from Clive Cowdery's Resolution, although traders remained especially sceptical about the latter, noting that Resolution has its hands full after its acquisition of Friends Provident.
Shares in L&G put on another 5p to 87¾p as more than 48 million shares changed hands by lunch time, making it the most traded stock.
The note from Deutsche Bank gave a boost to the whole sector. The City heavyweight advises snapping up Aviva, 21p stronger at 452p, and Old Mutual, ½p dearer at 100½p. More long term, it rates Prudential, 11½p better at 610p thanks to its exposure to Asia and strong management.
Analysts at the bank are less keen on L&G, but have upped their rating from sell to hold as fears over the effect of European solvency rules subside.
Shares in London were back in positive territory thanks to a strong showing from financial stocks. The FTSE 100 index rose 7.23 points to 5166.95. The benchmark has enjoyed its best ever quarterly performance, rising 22% since the start of July.
Man Group led the index higher after reporting a slight rise in assets under its management as redemptions slowed. The world's biggest listed hedge fund soared 24p to 332p. Smiths Group was the second-biggest winner among top stocks — rising 51p to 889p as investors cheered the technology firm's figures.
The index shrugged off a host of top stocks going ex-dividend which gave the FTSE a small knock.
Recruitment firm Hays was one of the biggest fallers among mid caps, dropping 3½p to 105p, after the consumer watchdog slapped it with a hefty fine for price-fixing. The headhunter was fined £30.4 million by the Office of Fair Trading for charges including the boycotting of a firm set up to act as intermediary between recruitment firms and construction groups. Seymour Pierce said that the fine was “a bit more than expected” but reckoned that it had largely been priced in to the shares.
The long-suffering car dealers motored ahead today after Pendragon found a friend in Citigroup. The heavyweight broker reckons that the company, which trades as Stratstone and Evans Halshaw, should get a triple boost in the coming months: from government plans this week to extend the car scrappage scheme to another 100,000 vehicles — which should add up to 5% to the volume of car sales — the VAT cut bringing demand forward and from tight cost controls.
Citi believes that September's industry car figures — due on 6 October — will show demand recovering. It rates Pendragon a high-risk buy, with a 50p price target for the shares, which today gained 1¾p to 39p. Rival Inchcape added ½p to 28½p.
All eyes were on Marks & Spencer, which posted its eighth consecutive quarterly drop in like-for-likes sales but still its best sales performance in two years. The shares — which have enjoyed a strong run up to the figures — fell 9¼p to 365½p because of profit-taking.
Reed Elsevier, the publishing and media group, dropped 7¾p to 488¾p after Goldman Sachs placed 22.4 million shares for an institutional investor at between £4.65 and £4.70 a pop.
Sage Group has found a fan in Morgan Stanley, which reckons the software outfit has the firepower to go on a buying spree.
The heavyweight bank has upgraded the software maker to overweight and set a 270p price target for the shares, which today rose 6½p to 235p. Analysts reckon cost-cutting has been swift, that it is getting a boost from the weakness of the pound and that its customers are loyal thanks to its business support service.
Troubled broadcaster ITV shrugged off news that the internet has overtaken TV for advertising spend in the UK, after Morgan Stanley reiterated its bull case for the stock. They still recommend the shares, despite the leadership crisis engulfing the company, on hopes that it will gain concessions from the Competition Commission over product placement. Morgan Stanley's analysts set a 55p target for the shares, which added ½p to 46p.
Gulf Keystone rose 4p to 91p after the oil and gas explorer trimmed its first-half losses and raised its estimates for the amount of crude which will flow from one of its drilling operations in Iraq.
