Market Report: Premier Oil heats up on takeover rumours

Oil companies, which have spearheaded the return of takeover chat after the credit crunch all but shut the rumour mill down, were in focus again yesterday. Investors piled into Premier Oil from the opening bell on talk that Santos, an Australian oil and gas exploration group, was considering a bid. Royal Dutch Shell and the Italian giant Eni were also linked, although by the end of the day there were dissenting voices over whether an offer would emerge at all.

Premier, which was in talks with an unnamed suitor a year ago and has been linked with Dubai Energy, closed up 6.16 per cent at 1,240p. Shares in the sector heated up earlier this month after Eni, among others, approached Burren Energy. The stock was supported further by spiking oil prices.

Talk of a bid for Forth Ports hoved back into view late in the day at £24 per share, sending the stock up 48p to 1,845p. The group is a perennial focus for the gossips, but, as the only independent UK port operator left, will probably be taken out at some stage.

One, very unlikely, story that refuses to die is BHP Billiton's supposed pursuit of Rio Tinto. Yesterday, the talk was of a £50-per-share bid, boosting Rio 83p to 4,490p.

After hitting a four-year low last week, DSG International was driven back up 7.11 per cent by bargain hunters and bid chat to 129.5p. It slumped after a profit warning last month, but was driven to the top of the leaderboard by reports of interest from Best Buy, the US electrical retailer that holds a stake in Carphone Warehouse.

Taylor Wimpey placated nervous shareholders with a solid trading update. The stock rose 6 per cent to 247.5p as the house builder said its integration was on track, although it added the US market remains challenging. The update pulled the sector up, with Hammerson the next best, up 5.4 per cent at 1,112p.

One trader was less enthusiastic. He pointed to what he called the "horrendous" net asset value announcement by the small-cap stock Invista Foundation Property Trust. He said: "News it is off 7.8 per cent for the quarter is more bad news for the UK property market." It retreated 2.25p to 93.75p.

The Competition Commission report into the supermarkets boosted Tesco 3.5 per cent to 488p. The report said the UK's largest food retailer was not anti-competitive.

There were two significant share placings on the main market yesterday. Home Retail Group closed 7.75p up at 436p on talk that Merrill Lynch had placed 17.5 million shares at 453p each. Northern Foods rose 3.75p as Morgan Stanley supposedly placed 13.5 million shares at between 104p and 107p each, although the stock closed the day flat.

Traders weren't too spooked by the early FTSE 100 losses, banishing a potential Halloween horror show to storm up 62.6 points to 6,721.6.

Of the few fallers, Unilever was the worst, following fears today's results will mark a slowdown in sales. The stock fell 1.63 per cent to 1,625p. Also down was Schroders, giving up 0.52 per cent to 1,539p after a strong performance the previous day. HSBC downgraded the stock to "neutral" on valuation grounds, while news also emerged that chief executive Michael Dobson had sold 550,000 shares at £13.30 each.

On the second tier, the electronics group Invensys stormed up after selling its APV division to SPX Corporation for £250m. It rose 5.65 per cent to 327p, as Evolution Securities backed the move.

The worst performer was Tullet Prebon, off 2.91 per cent at 442p after Bear Stearns said its business profile and growth outlook were weaker than rival inter-dealer brokers. Bear did rate the stock as a "peer perform", however, saying the weakness was offset by its lower market rating.

Outside the FTSE 350, investors were happily splashing around in Global Marine Energy. The beleaguered stock returned to trading after calling a halt to the reverse takeover talks with IDM Group. Yet the shares soared 45.95 per cent to 13.5p as IDM said it was considering launching an offer.

It was a strong first day of trading for the quantity surveyor Cyril Sweett Group, which listed at 110p and closed 12p stronger.

Avocet Mining was tracking higher after strong production numbers. Evos upped its target price to 195p from 150p as a result, sending the shares up 10.5p to 178p. Central African Mining also had support after recent difficulties in the Congo. It rose 4p to 28.5p.

Brinkley Mining shed 0.22p to 7.75p. The group, which also has issues in the Congo, fell after a poor read-across from Canada's Uranium One, which slashed production forecasts. Brinkley fell despite the hedge fund Och Ziff taking a 21.3 per cent stake in the group.

Bottom of the small caps was the laundry group Johnson Service Group which warned on full year profits. It was all washed out at the close, 27.26 per cent lower at 154.75p.