Merger Talks Lift London

Ivaylo
18 Sep, 2006
New York City

Large-cap oil and mining stocks led London blue chip index steadily higher through the morning session, buoyed by Royal Dutch Shell move. Oil companies moved higher as well as crude prices improved towards $64 a barrel. The approach of Royal Dutch Shell is no surprise to investors as both companies have been linked in merger talks on a number of occasions. The FTSE 100 was 32.3 points higher at 5,909.3 at mid-day, an increase of 0.5%.

[R]9:30AM Merger talks in the oil sector boost the FTSE 100 index.[/R]
The FTSE 100 in London was 32.3 points higher at 5,909.3 at mid-day, an increase of 0.5%. The market focused on BG Group on talks it had been approached on merger offer from Royal Dutch Shell. The other main news came from a profit warning from CSR, the Bluetooth group, which saw its shares dip 25% after it revised its annual profit forecasts lower.

Advancers

BP was up 1.4% as Brent crude rose 21 cents to $63.54 a barrel and Royal Dutch Shell was up 1%. PartyGaming rallied 5.75% after tumbling last Friday on news Vienna-listed peer BWin was suspended after Bavaria revoked its online gaming licence. There was also talk of a merger in the banking sector between Northern Rock, remaining flat and Bradford & Bingley, up 0.5%. Oil explorer Burren Energy was 1.67% as its half-year profit rose 69%.

Department store group Debenhams was up 0.75% as sales for the year to August rose by 6.6%. Collins Stewart Tullett gained 2.35 after it reported a sharp rise in interim profits and said it expected the demerger of the Collins Stewart business to be completed by the end of the year. Oil and gas services company Petrofac climbed 6.5% after a jump in first-half earnings.

Decliners

Prudential spiked higher in early trade on reheated takeover talk, although this quickly died down. The stock was down 0.6%. Blue tooth chip specialist CSR slumped 23.69% after it revised down its third quarter revenue estimates. Barclays is lower, along with Legal & General, respectively 1.60% and flat. ITV, Elsevier and Pearson fell and Vodafone was also weaker, down 0.33%.

Corporate News

Reports suggested BP was planning a total review of its operations following the refinery explosion at its Texas operation last year. The move is designed to reassure shareholders over safety measures. MFI Furniture also confirmed discussions are at an advance stage for the disposal of its retail operations to Merchant Equity Partners, though it adds there is not yet certainty as to the final terms or timing of any transaction.