LONDON FTSE 100 CLOSE 5,364.81 +40.85

Published on Wednesday 25 November 2009 20:13

TAKEOVER rumours have swirled around almost all of Britain's utilities in recent months, with Centrica recently propped up by talk of an approach by Gazprom, and alternative theories for United Utilities and Severn Trent.

Yesterday, though, it was International Power in the spotlight, with shares climbing on talk of interest from the French. According to the rumours, International Power, which owns and operates power plants worldwide, could receive a bid from GDF Suez, which is in talks with its largest shareholder, the French government.

The story is not new, but the talk was that the French might be prepared to pay 400p-a-share, in a deal that analysts have said makes strategic sense.

Shares in International Power rose by almost 4 per cent earlier in the session, but eased to close up 2.5 per cent at 282.5p.

The broader London market was higher as higher metal prices buoyed mining companies. The FTSE 100 index of leading companies closed up 40.85 points at 5,364.81.

Economic sentiment also improved marginally, with official confirmation that while the UK economy contracted in the third quarter, the drop in GDP was less than originally thought.

Gold prices rose again on a weak dollar. Randgold Resources, which mines the precious metal, tracked its movement, rising 3 per cent to 5,190p. Elsewhere in the sector, BHP Billiton, Antofagasta and Anglo American all rose by more than 2.5 per cent.

Mining companies played catch up to Compass, the catering group. Its full-year results were ahead of expectations, sending shares up 6 per cent or 24.6p to 426.6p.

News in the banking sector was dominated by questions over how much Lloyds knew about secret government loans given to the troubled HBOS bank prior to its takeover.

Lloyds Banking Group shares are still being driven by reaction to its proposed 13.5 billion cash call, on reports that investors who do not take up their rights could be in line for a windfall as institutions snap up unwanted stock from its record-breaking rights issue.

This helped push Lloyds shares up 0.44p at 94.25p, while elsewhere Barclays gained 2.3p to 316.3p and HSBC added 4.2p to 741.2p. Royal Bank of Scotland closed 0.54p off at 35.77p.

Hedge fund giant Man Group was the leading faller in the FTSE 100, down 17p, or nearly 5 per cent, to 330.5p as its shares traded without the rights to its latest dividend for the first time.

Other ex-dividend stocks were oil and gas firm Amec and fashion chain Next, which both gained 2p to close at 796p and at 2,047p, respectively.

The London Stock Exchange itself was sharply lower, dropping 32.5p to 814.5p after revealing a fall in trading amid fierce competition.

Johnson Matthey, the platinum refiner, dropped 62p to 1,529p, after revealing that lower metal prices had led to a 21 per cent fall in first-half pre-tax profits.

Pharmaceutical companies, which are generally low risk, rose, with Astrazeneca climbing 2.5 per cent to 2,778p.

On the wider scene, design and engineering group WS Atkins was a FTSE 250 top performer, up 42p or about 8 per cent to 600.5p as the firm raised its dividend despite lower profits amid confidence over full-year prospects.

Heading downwards was defence research firm Qinetiq, which was 14.7p lower, a fall of 8 per cent, to 163.8p, after the company said it was unlikely to meet previous expectations due to contract delays in its main UK and US markets.