Takeover talk gees up the market

LONDON FTSE 100 CLOSE 5,770.28 +24.96

THE Footsie edged forward yesterday after takeover talk provided the main focus on an otherwise slow session for traders.

Banknote printer De La Rue surged 30 per cent as its French suitor confirmed it was behind a near-900 million approach for the troubled firm, while blue-chip miner Rio Tinto was also in the spotlight after its 2.2 billion approach for Australian firm Riversdale mining.

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The FTSE 100 index rose 24.96 points or 0.4 per cent to 5,770.28 amid the takeover excitement, despite early losses on the Dow Jones Industrial Average in America.

US stocks fell after Federal Reserve bank chairman Ben Bernanke hinted that a third round of quantitative easing may be needed to keep America's recovery on track. He said in an interview on Sunday night that the US economy was still struggling to become "self-sustaining".

But David Jones, chief market strategist at IG Index, said: "With Fed chairman Ben Bernanke signalling that further stimulus cannot be ruled out, investors still have a buy-weakness mentality, suggesting that a 'Santa rally' could be on the cards over the next few weeks."

Disappointing US payrolls data on Friday has added to concerns over the recovery.

The pound was up against a weakened euro at €1.18, as concerns in the eurozone over the debt crisis continued. Sterling was down against the dollar at $1.56.

In London, investor attention was set firmly on takeover developments in the Footsie and second tier.

FTSE 100-listed miner Rio Tinto has sparked a potential bid battle for Riversdale after it was flushed out as a suitor, with Rio's shares lifting 40.5p to 4,456p.

However, much of the focus was outside the blue chip index with De La Rue top of the FTSE 250 risers board - up 193.5p to 841p - after it confirmed an "opportunistic" approach. French rival Oberthur Technologies later revealed it was De La Rue's suitor.

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Punch Taverns followed closely behind it with a gain of 4.3p to 69.2p in the wake of a report suggesting private equity firm CVC Capital Partners was preparing to bid for the group.

And elsewhere outsourcing firm Mouchel was 33 per cent higher, up 15.7p to 72.3p, as it said it had received a number of approaches after recent hefty share price falls on financial fears.

Back in the FTSE 100, supermarket Tesco was among the fallers after broker UBS downgraded the group citing expectations for growth to slow over the next ten years. Shares in the retail giant, which reports back on third-quarter figures today, dropped 6.9p to 420p.

Rolls-Royce was enjoying a better session, up 13p to 640.5p, thanks to news of recent energy project contract wins worth more than $110 million (70.2m).

Among the Scottish stocks, shares in Faroe Petroleum were unchanged at 176.25p after the oil and gas company announced it had farmed out drilling licence for the Fulla to the west of Shetland to Canadian Overseas Petroleum.

Fellow oil and gas explorer Cairn Energy was up 10.2p or 2.6 per cent at 408p, while Edinburgh-based Bowleven was ahead by 2.4 per cent, or 8.5p, at 357p.