*** FT:Bid speculation offsets market worries ***
Leading shares in Europe went lower on Monday morning in the wake of the sharp fall overnight on Hong Kong. That decline was set off by renewed fears about a possible devaluation by China.
But shares in Hong Kong rallied towards the close from their worst levels of the session and in Europe continued speculation about further bids and mergers helped to offset the negative global pressures.
Bonds in the euro-zone were helped by the anxiety over further adverse developments in Asia and Latin America but UK gilts went a shade lower on profit-taking. The foreign exchange markets were calm with the dollar affected by both the downward influence of the crisis in Brazil and the upward pressure from its safe haven image in Asia.
The fresh outbreak of anxiety about the stability of the Chinese yuan was triggered by an article in the China Daily newspaper discussing the case for devaluation. People's Bank of China denied any change in policy but dealers suggested that China might be floating the notion of devaluation into the markets to judge reactions. Ironically, the black market rate for the Chinese yuan to the dollar, thanks to the recent surge in the Japanese yen, has improved in the past two months from 9.1 to 8.9.
While takeover speculators were active in London, investors who had bought Pathé in Paris last week on hopes of a profitable bid battle received a nasty surprise. The controversial Bolloré group has sold its stake of almost 20 per cent to Vivendi and Canal Plus and Pathé shares were suspended limit-down as short-term holders rushed for the exit.
In London LucasVarity, the Anglo-US car parts group, soared to the top of the FTSE 100 with a gain of 11 per cent on hopes of a bid from Federal Mogul. Electra Investment Trust rose 20 per cent on news of discussions with 3i, the venture capital operator, and Field Group gained 6 per cent after it revealed that Shorewood Packaging of the US may offer more than the existing £194m bid from Chesapeake.
Portsmouth & Sunderland gained another 10 per cent in the media sector on continued speculation of further bid approaches and Mirror Group edged upwards as dealers waited for the outcome of the confrontation on Tuesday between the non-executive directors and the chief executive.
Other ongoing bid shares to move upwards pending tangible developments were Securicor, the minority holder in Cellnet mobile phones, and Guardian Royal Exchange, the insurance group.
Monsoon, the fashion chain, fell 11 per cent on disappointing results but Lonrho, now a "pure" mining play, gained 3 per cent on its satisfactory trading report and news that it is to change its name to Lonmin. Rage Software, the computer games company, jumped 18 per cent on discussions about a distribution deal with Microsoft. |
