Rio Tinto merger activity props up FTSE
Rio Tinto shares put on another 8% today as traders continued to eye the possibility of a multi-billion pound takeover by BHP Billiton.
The much-needed merger and acquisition activity propped up the London market for a while, with the FTSE 100 Index ahead 61 points at one stage.
However, weaker banking and financial shares caused the top flight to retreat, with the Footsie 27.5 points lower at 6354.4 by mid-morning.
Expectations for another tough session in the United States added to nerves, particularly after technology shares fell heavily on Thursday following computer network firm Cisco’s warning that the credit crunch was likely to slow growth.
News of BHP Billiton’s interest Rio Tinto caused its target’s share price to rise 454p to 5750p, following the 22% surge seen yesterday. BHP Billiton gained 53p to 1709p, while consolidation hopes also boosted Xstrata with an improvement of 44p to 3617p.
BG Group was also stronger as investors piled into the stock for a second successive session, after a major oil discovery at a Brazilian field in which BG has a 25% stake. Shares were 41p higher at a record of 1030p.
Banking giants Barclays and Royal Bank of Scotland continued to weaken as investors worried about potential write-downs from the banking giants. RBS slipped 12.5p to 402.5p and Barclays fell 13p to 473.25p.
Friends Provident was 7.3p lower at 152.9p after broker UBS trimmed its target price for the insurance group. Sentiment towards the stock has been hit followed the withdrawal of a merger with closed funds firm Resolution.
Retailers were also weak with Argos owner Home Retail Group down 10.25p at 391.75p and B&Q firm Kingfisher 3.8p cheaper at 173.5p.
Elsewhere, shares in media group Emap were up 2%, or 15p to 852p, after it reporting encouraging progress on the possible break-up of the business.
Lower down the market, model maker Hornby rose in the wake of improved sales numbers, particularly from Scalextric after demand was boosted by the success of Formula One driver Lewis Hamilton. Shares were 4% higher, but later eased to stand unchanged at 243p.
