Forth Ports watches share price sink

SHARES in Forth Ports sank by nearly 13 per cent yesterday as the market had its first chance to react to Thursday night's news that a consortium of suitors had ended a potential takeover.

Northstream – which consisted of shareholders Peel Ports, RREEF and Arcus – walked away from making a final bid for the FTSE-250 ports and property group ahead of Tuesday's deadline from the Takeover Panel.

Forth's shares fell 163p to 1,112p as the FTSE-100 Index closed down 6.74 points at 5,188.43, narrowly missing a third consecutive day of gains.

More losses for BP and a lacklustre start to trading in New York ensured the Footsie finished the day in the red despite rising as high as 5,240.27.

Analysts warned the European debt fears that have rocked markets in recent weeks were still in the minds of investors.

However, there was a vote of confidence from broker Morgan Stanley, which raised its year-end target for the Footsie to 5,800 from 5,000. There was also a boost from an improved Libor rate – the indication of the interest rate that banks must pay to borrow from each other – after a fortnight of consistent increases.

IG trader Yusuf Heusen said: "We have seen markets pull themselves back from the brink over the last five days but beaten-up investors will be looking for more reassurance that this has not been just a pause before the next lurch downwards."

America's Dow Jones Industrial Average was well inside negative territory by the time of London's close following mixed reports on the US economy.

Figures showed consumer spending was stagnant in April while incomes posted a tiny advance, offering signs that the economic recovery could slow.

However, this was not enough to prevent the dollar from maintaining its recent strength against the pound. Sterling stood at $1.44 following a 0.5 per cent drop and was down by a similar level against the euro.

The major corporate news centred on BP and Prudential as the pair grappled with high-profile difficulties.

Thursday's recovery for BP shares proved to be short-lived as the oil giant said the cost of the Gulf of Mexico oil spill now stood at $930 million (640m) – up $170m in the past four days alone. Shares were down 5 per cent or 26p to 494.8p after surging 6 per cent on Thursday.

Attention was also focused on Prudential after the insurer said it was in talks with AIG about renegotiating the terms of its takeover of the American insurer's Asian arm AIA.

Pru shares, which rose sharply at one stage on Thursday on speculation that it had pulled the $35 billion deal, fell 6p yesterday to 541.5p.

Severn Trent finished the session at the top of the risers board – up 3 per cent or 39p to 1,198p – after underlying profits of 557.1m for the year to 31 March came in ahead of market expectations. Rival United Utilities rose by 15p to close at 539.5p.

The big talking point in the FTSE 250 Index came from the building supplies sector after Travis Perkins announced it was on the brink of a deal worth 553m to buy plumbing specialist BSS. Travis shares were 6 per cent or 45.5p higher at 790.5p, while BSS jumped 34 per cent or 112p to 437p.