Excitement builds over Barratt

Published on Wednesday 10 March 2010 20:05

LONDON FTSE 100 CLOSE 5,640.57 +38.27

THERE was some excitement outside of the top flight yesterday with shares in housebuilder Barratt charging ahead amid trader talk of a takeover swoop from rival Persimmon.

Shares in Barratt gained almost 6 per cent to close at 121.9p, having been above 123p earlier. Amid the takeover rumours, one trader said a figure of 170p a share had been "bandied about" as a possible level for the bid.

Neither Barratt nor Persimmon would comment on the market talk.

Last week Persimmon reported a swing back to a full-year profit aided by a substantial writeback and added it would continue to reduce its debt.

The week before, Barratt gave a bullish forecast for its operating margins in the second half of the year as it reported improved trading in the first half.

Analysts appeared sceptical about a takeover, however.

"It's not going to happen," said Alastair Stewart at Investec. "The panel rules are if Barratt has been approached and there's speculation, no matter how brief, Barratt would have to tell the panel."

Another analyst said a large acquisition in the sector would be unlikely at present given the uncertainty surrounding the macro-economic picture.

Away from the buzz in the housebuilding sector, Britain's leading share index added nearly 0.7 per cent, buoyed by strength in commodity issues, supported by trade data from China, and in banks and insurers as Wall Street put in an early advance.

The benchmark FTSE 100 closed at 5,640.57, up 38.27 points and at levels not seen since June 2008. The blue chip index remains more than 60 per cent above levels hit almost exactly a year ago when the market reached a trough.

Mic Mills, senior trader at ETX Capital, said: "Wall Street came in with some early gains and stirred the FTSE from an earlier torpor late afternoon.

"But aside from strength in heavyweight commodity issues there really looks to be little underlying the advance and with new multi-month peaks being struck, investors might start to find the air getting a bit rarified at these levels."

A smaller-than-expected rise in US oil stocks pushed up crude prices and helped index heavyweights Royal Dutch Shell and BP move ahead 20.5p to 1,845p and 5.3p to 624.9p respectively.

In a slow session for major corporate news, Standard Life's announcement that it had beaten City forecasts with operating profits of 919 million for 2009 gave the stock a boost, up 4.1p to 208.3p.

Elsewhere in the financial sector, part-nationalised Royal Bank of Scotland and Lloyds Banking Group added 1.4p to 40.4p and 2.1p to 55.3p respectively.

Insurer Prudential improved 15p to 534.5p as it continues to claw back ground lost after news of its record rights issue to finance the mammoth deal to buy AIG's Asian business.

Barclays also fought back from an early slide after reports claimed it was working on plans to buy a large retail bank in the United States. Shares added 2.1p to 347.9p.

The fallers' board was littered with blue chip stocks which turned ex-dividend, meaning that new investors will not gain the next dividend payout.

This hit British American Tobacco, down 71.5p at 2,235p and tour operator TUI Travel, off 5.4p at 277.2p.

Car dealership Inchcape fell more than 4 per cent after it said that it expected market conditions to remain challenging this year.

Profits for 2009 fell by less than expected, but shares nonetheless slid 1.3p to 28.3p.

Elsewhere, Forth Ports drifted 12p lower to 1,395p amid a continuing takeover struggle.