Financial Times: Bid speculation pushes London higher: “Shell was up 2.2 per cent at 399¼p on reports that Total could launch a bid for the Anglo-Dutch oil company” (ShellNews.net)

By Michael Neill and Chris Flood

Published: August 16 2004 11:09 | Last updated: August 16 2004 17:13

Bid speculation helped the London market rise on Monday, as equity dealers latched onto rumours no matter how unrealistic they may prove to be.

Shell was up 2.2 per cent at 399¼p on reports that Total could launch a bid for the Anglo-Dutch oil company, which is nearly twice the size of its French rival.

Neither company would make any comment, although Total stood by remarks made earlier this month by Robert Castaigne, chief financial officer, that high oil prices meant now is not the time for large-scale acquisitions.

The FTSE 100 rose 1.1 per cent to 4,350.2, with the mid-cap FTSE 250 up 0.3 per cent to close at 5,875. Trading volume was 1.9bn.

J Sainsbury rose 0.3 per cent to 257¼p, on speculation that a meeting with Target, the US food retailer, might lead to a bid for the struggling UK supermarket chain. Sainsbury’s made no comment but analysts were sceptical, saying meetings with foreign companies doing the same business are commonplace.

Sainsbury also acquired Jacksons Stores, the convenience chain which owns 114 stores across Yorkshire and the West Midlands and reported turnover of £143m for the 12 months to April 24.

While this takes Sainsbury’s further into the booming convenience store market, Seymour Pierce said it was too little, too late and maintained its “underperform” rating .

Britannic, the life company, was also subjected to bid rumours. The shares rose 2.5 per cent before falling to close 0.9 per cent down at 345p, following comments last week from Jim Sutcliffe, chief executive of Old Mutual, that the South Africa-based insurer could spend up to £1bn on a UK acquisition. Britannic has a market capitalisation of about £700m. Old Mutual recovered 1 per cent to 99p.

Michael Page International fell 2.7 per cent to 159p even after the recruitment consultancy announced interim pre-tax profits of £17.8m, up 53.4 per cent and at the top-end of forecasts.

Terry Benson, chief executive, said he was happy with the market consensus of £38m pre-tax profit for the full year. Seymour Pierce upgraded its rating from “underperform” to “outperform”.

Ebookers, the online travel group, put on 14.3 per cent to 140p after narrowing its first-half loss to an in-line £5.2m. Following last month’s profit warning, there was some hope in the seeming recovery of long-haul flights. Bridgewell Securities said the market was too pessimistic and has sold the shares too low. Lastminute.com recovered 6.7 per cent to 111½p.

Lloyd’s of London brokers weathered Hurricane Charley surprisingly well, given initial estimates have put the total physical cost at $15-20bn, making it the second largest hurricane related insured loss in history.

Insurance industry losses are likely to be significantly less, however, as much of Florida’s property is insured through quasi-government agencies, set up following Hurricane Andrew in 1992.

While Bridgewell Securities said there will be a negative impact on second-half earnings, the broker concluded: “The effect on the insurance industry for next year should be to hold rates at a higher level than would otherwise prove to be the case.”

Atrium Underwriting fell 2.9 per cent to 167½p, SVB Holdings lost 2 per cent to 36p, Cox Insurance was off 1.7 per cent at 56p, Goshawk Insurance gave up 2.2 per cent to 43½p, Jardine Lloyd Thompson shed 0.8 per cent to 422½p, Wellington Underwriting was 0.6 per cent lower at 80p and Hiscox Insurance was down 1.6 per cent at 173p.

BHP Billiton, the mining group, rose 2.9 per cent to 523¼p ahead of 2004 results on Wednesday, when net profit is expected to rise nearly 73 per cent to $3.3bn. Other miners rose in anticipation. Anglo-American added 3.9 per cent to £12.44, Antofagasta was up 1.6 per cent at £10.06½p, Rio Tinto put on 1.1 per cent to £13.73, and Xstrata was up 3.8 per cent at 799p.

WPP added 3.8 per cent to 489p as Morgan Stanley upgraded its recommendation from “underweight” to “overweight” ahead of this week’s results and after the shares have underperformed for six months.

Ultraframe fell 32 per cent to 75p after the maker of domestic conservatories issued its fourth profit warning for the current fiscal year.

Medisys rose 10.2 per cent to 8¼p after the drug devices maker said sales of its Flight blood glucose meter in a pilot scheme with Wal-Mart had been so encouraging the US retailer would make it available throughout its US stores over the next two weeks.