Market report: Thursday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

Mining companies and the soaring cost of raw materials were put back on the agenda by stock market investors today following Rio Tinto's agreed £18.2bn takeover bid for Canadian aluminium giant Alcan.

The news had been anticipated for much of the week and dealers initially nodded their approval, allowing the Rio Tinto price to touch 4088p. They later had second thoughts, which left the shares nursing a loss of 183p at 3810p.

City speculators say further consolidation of the mining sector was inevitable following the sharp rise in the price of base metals, such as copper, zinc and aluminium, over the past five years and they are on the lookout for the next takeover target.

As a result, mining shares were all marked higher and six of the top 10 best-performing blue-chips were mining shares. They were led by Antofagasta, up 43p to 715½p. Vedanta Resources also put on 109p to 1800p, Kazakhmys 53p to 1423p, Xstrata 153p to 3427p, Lonmin 150p to 4350p and BHP Billiton 60p to 1554p.

Support for the miners helped boost the rest of the market and lifted the FTSE 100 by 70 to 6685.1. Wall Street continued to build on yesterday's lead with shares opening sharply higher this afternoon. The Dow rose 112.80 to 13,690.70.

Takeover talk boiled over in Whitbread, down 48p at 1898p. The shares rose sharply yesterday on talk of a bid for 2400p a share from Starwood Capital. Lloyds TSB rose 6½p to 560p on whispers that Temasek Holdings, the investment arm of the Singapore government, has been building a stake. Temasek already owns an 11% stake in Standard Chartered, which it bought last year from the estate of Tan Sri Khoo Teck Puat.

Motor insurance broker Admiral fell 28p to 862p after failing to find a buyer for its Confused.com. Admiral has pulled out of talks with private-equity investors who wanted to pay between £600m and £650m for a minority stake in the business.

City speculation claims the website first attracted offers of about £700m earlier this year. Dealers say the news could also bode badly for Moneysupermarket.com, described as the UK's biggest price comparison website, which is due to float on the stock market later this month with a price tag of £1bn.

Credit Suisse has raised its target for British American Tobacco, 3p down at 1670p, from 1700p to 1800p and repeated its outperform rating ahead of first-half results later this month.

It was the first day of trading on Aim for Dhir India Investments following a placing of 16.6m shares at 150p, which raised £25m. The price opened at 152½p before settling at 157½p.

Citigroup has cut Barratt Developments, up 11½p at 980½p, from 1405p to 1200p but has repeated its buy rating in the wake of the housebuilder's trading update yesterday.

Superglass Holdings began trading on the big board following a placing at 180p, which values the maker of glass mineral fibre insulation products for the property market at £105m. The placing of shares raised £72.8m for existing shareholders. The price touched 213p before settling at 206p.

GEM Diamonds benefited from a bullish trading update, climbing 64p to 1070p.

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