Market Report: Informa gains as PEP finalises takeover finance

Buyout hopes buoyed Informa, the FTSE 250-listed publisher, which advanced to 440.5p, up 14.75p, yesterday. The stock gained ground after UBS, reacting to reports that the Providence Equity Partners-led consortium, which confirmed an initial 506p-per-share approach to the company in July, was close to finalising financing for the takeover, said the odds in favour of the deal had "increased sharply".

"We believe both Informa management and Providence are keen to consummate a deal, but the main stumbling block has been financing," said the UBS analyst Polo Tang, who added that the lack of newsflow during August reflected "banks waiting until investors return in September in order to arrange financing".

Traders welcomed the assessment with relief. Rumours suggesting that the takeover may not materialise owing to the turmoil in the debt markets had hurt Informa's share price and news on financing should underpin gains ahead of a formal bid, they added.

Overall, recent comments from Alistair Darling, the Chancellor of the Exchequer, that the outlook for the economy may be the worst for 60 years, hit sentiment across the London market and the FTSE 100 closed down 33.8 points at 5,602.8.

The mid-cap FTSE 250 index registered late gains, closing up 27.7 points at 9,409.5, but traders said that the euphoria from last week's better-than-expected gross domestic product figures from the United States had been replaced with concern for the UK. Fresh evidence of lower house prices from Hometrack and declining mortgage approvals from the Bank of England, which is due to rule on UK interest rates later this week, contributed to the shift in sentiment.

On the FTSE 100, the heavyweight mining, oil and gas sectors proved the biggest drag as copper prices eased and the oil price fell back as commodity traders moved to bank profits on news that Hurricane Gustav was not strengthening as it advanced on the American coast. As a result, Kazakhmys, the Kazakhstan copper miner, slipped 5.8 per cent or 75p to 1,217p and Cairn Energy, the India-focused oil and gas explorer and producer, retreated to 2,810p, down 5.64 per cent or 168p, at first and second place on the FTSE 100 respectively.

Elsewhere, Enterprise Inns, which was hit by a round of negative broker assessments last week, continued to trade down amid concern about debt, the impact of the consumer slowdown and falling property prices. "It's been a bad run for Enterprise and it's unlikely to get better as rivals report later this week," said one trader, referring to upcoming updates from Punch Taverns, up 3.75p at 295p, and JD Wetherspoon, down 8.5p at 256p. Enterprise closed down 2.47 per cent or 7.5p at 296p.

On the upside, improved oil prices boosted British Airways, which climbed to first place on the senior index, up more than 4 per cent or 10.75p at 261.75p. RSA Insurance was second best, up almost 4 per cent or 5.9p at 156.7p as speculators pegged their hopes on an approach from Zurich Financial Services, the Swiss group which last week was rumoured to be mulling a takeover of RSA.

On the FTSE 250, Heritage Oil soared to 226p, up 12.86 per cent or 25.75p, after reports in the weekend press suggested the company is to announce a significant oil discovery in Uganda.

Housebuilders shrugged off the grim mortgage-lending and house-price statistics as investors pegged their hopes on the government's upcoming package of relief measures for thehousing market. Sentiment was also helped by weekend reports that Taylor Wimpey, which gained 3.23 per cent, or 1.75p, to 56p last night, is preparing a campaign to broaden its share holder base to raise capital. As a result, Barratt Developments gained 6.12 per cent, or 9p, to 156p, Bellway advanced to 644.5p, up 4.97 per cent or 30.5p, and Persimmon was up 3.15 per cent or 11.75p at 385.25p.

Reinsurance and risk intermediary Benfield was up 8p at 352p even as the Royal Bank of Scotland played down talk that March & McLennan may counter Aon's £844m recommended cash offer for the company. The broker pointed out that although the two companies have talked before, "Marsh has never previously shown a desire to pay up".

On the downside, flooring distributor Headlam took the wooden spoon on the mid-cap index after posting interim results, warning that it current market conditions meant that it faced a challenge to meet its trading objectives for the full year. The stock retreated to 294.5p, down 11.69 per cent or 39p, as spooked investors sold out.

Among smaller companies, Woolworths gained 6.61 per cent, or 0.48p, to 7.74p following renewed speculation about a possible bid from property tycoon Ardeshir Naghshineh, who already owns just over 10 per cent of the retailer.