Royal Bank of Scotland led the banking sector higher today amid reports that its chairman had been reassuring investors that it had no intention of cutting the dividend or announcing a capital raising when it reports results.
It has said that it would consider selling off its stake in the Bank of China if it needed to raise cash in the credit crisis.
The shares were up 5 per cent at 202.7p, also benefiting from talk that its auction of the Angel Trains leasing business was near completion with a price of about £3 billion.
The London market was just in positive territory, up 8 points at 6,038.2 at 10.30am, after a strong gain on Tokyo and Hong Kong markets and the Dow Jones closing up 93 points late on Friday.
Friends Provident rose 4.4 per cent to 142p on talk that JC Flowers was close to making a bid for the insurer.
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Miners were also still gaining after China’s move to take a 12 per cent stake in Rio Tinto.
Anglo American gained 2.8 per cent to £29.92 after Anglo said that it had signed a memorandum of understanding with the China Development Bank — the bank that funded Chinalco’s purchase of a Rio stake — to develop natural resource projects in China and Africa.
Vedanta Resources, the Indian miner, which has assets in Zambia and Australia, was up 4 per cent at £20.36.
There has been long-running talk that the Chinese might bid or seek to do a deal with Vedanta over its African assets.
But Rio Tinto was off 1 per cent at £55.46 as investors took profits and switched into other miners. Analysts at Numis advised investors to take profits since it thought BHP would probably have to walk away from a bid. Chinalco ruled out upping its stake today.
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Xstrata was also down, off 1.5 per cent at £39.46 as it is thought that a bid from Vale, of Brazil, is still some way off and on reports that Merrill Lynch, one of Vale’s advisers, had been fired since it refused to help finance the deal from its own balance sheet. Lehmans, however, is still the key adviser.
ITV gained 2 per cent to 78.1p on weekend reports of a private equity consortium bid at about 100p.
Carphone Warehouse, which had spiked up last week on talk of a bid from Best Buy of the US, lost 5.6 per cent to 320.5p.
EasyJet was the worst performer in the FTSE 250, down 9 per cent at 425p after Ryanair gave warning of higher fuel costs and lower consumer spending this year. Ryanair lost 12 per cent to €3.20.
Northern Rock was up 6 per cent at 101.75p as the deadline today approached for bids for the bank.
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Enodis edged up 0.75p at 153p after Credit Suisse reiterated its “outperform” advice and its £20 price target.
“We believe investors should be re-examing the merits of Enodis, particularly in light of FKI’s announcement on Friday it had received a bid approach,” the bank said.