UK blue chips firmed up during midday trading, with Rio Tinto’s announcement of a recommended bid for Canada’s Alcan adding strength to the mining sector.
At 11.57, the FTSE 100 was 17.7 points up at 6,632.8, up from the session low of 6,594.7, but having fallen back from an early peak of 6,642.8. The FTSE 250 was up 69.1 at 11,735.9.
Rio Tinto, the world’s second largest miner after BHP Billiton, dropped 71 pence at 3,922 as investors weighed up its $38.1bn white knight bid for aluminium group Alcan, easily trumping a $28.8bn offer from Alcoa.
Commentators claim Rio’s big money offer for the Canadian firm is causing concern among investors.
Royal Dutch Shell was also down, 19 pence at 2,088, after being downgraded to ’neutral’ from ’buy’ by UBS, following an increase in share price of more than 30 per cent in sterling terms since mid-March.
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Rio’s consolidation move gave strength to the rest of the mining sector, which ranked among the best performers in the FTSE 100. Vedanta topped the risers, up 66 pence at 1,757, while Antofagasta added 16p to 688.5p, Kazakhmys gained 26p to 1,396, Lonmin was 95p up at 4,295p and Xstrata was ahead 80p at 3,354p.
Fallers included Experian, down 7p at 613p after its latest trading update failed to impress.
Whitbread gave up some of the gains inspired by takeover speculation yesterday. The shares were 60p lower at £18.86.
Other blue chip risers, included hedge fund firm Man Group, adding 11.5p to 604p after a solid trading update.
Man Group said that its overall product performance has continued to be positive for the three months to the end of June on strong demand. Sales during the period were $3.8bn and funds under management increased to $67bn at June 30 from $61.7bn usd at March 31, the company said in an AGM statement.
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Kingfisher took on 2.25p to 221.75p after being upgraded to ’equal-weight’ by Morgan Stanley on valuation grounds, albeit while reducing its earnings estimates.
Morgan Stanley cut its earnings estimates but said the new lower earnings were already reflected in Kingfisher’s share price.
Shares in drugs firm Shire added 19p to £12.16 after Morgan Stanley resumed coverage of the company with an ’overweight’ recommendation and a 1,400 pence price target.
The broker said that Shire is building value from multiple franchises and is one of the most exciting pipelines in the European pharmaceutical space.
CSR was a strong FTSE 250 riser, adding 44 pence to 849.5 after Morgan Stanley upgraded its rating to ’equal weight’ with a raised target of 720p.
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Qinetiq found support once again from takeover chatter, adding 3.25 pence to 199.5, with newspaper reports suggesting Finmeccanica of Italy could be an interested party.
Among fallers, Spectris shed 20.5p to 923.5p as its trading update failed to excite.
The precision instrumentation and controls company, said it expects pretax profits to show strong year-on-year growth in the six months to June 30 despite the adverse effect of currency.
Across the pond, Wall Street was looking at a slightly higher open as investors weigh strong results from Genentech and Yum Brands against a warning of an operating loss from Motorola, with consolidation in the metals sector also a focus.