Takeover talks boost FTSE

Takeover activity helped lift the London market higher today after blue-chip Old Mutual said it had entered into exclusive talks with HSBC to sell South African bank Nedbank.

Takeover activity helped lift the London market higher today after blue-chip Old Mutual said it had entered into exclusive talks with HSBC to sell South African bank Nedbank.

Old Mutual, majority owner of Nedbank, saw its shares rise 3.9p or 3.2% in value to 124.9p, while HSBC rose 0.8%, up 5p to 635.5p.

The FTSE 100 Index followed suit, up 0.76% after a 39-point rise to 5235, marking a welcome return to positive territory after three consecutive sessions in the red.

On the other side of the Atlantic, markets fluctuated as concerns over US recovery continued. The Dow Jones industrial average fell 0.5%, after earlier gains.

In the insurance sector, Aviva and Prudential moved higher as traders searched for the next candidates for mergers & acquisitions activity. Aviva led the top flight, up 13.5p or 3.5% to 391.2p, while Prudential rose 13.5p or 2.4% to 571p.

Miners were in sharp focus in the UK and Australian markets as investors digested the implications of the country's inconclusive election result over the weekend.

The prospect of a hung parliament caused weakness in the Australian dollar early on, but stocks in mining companies rose as the Australian government's plans for a new tax on their profits were thrown into doubt.

Anglo-Australian mining group BHP Billiton was up 9p at 1830p in London as its aims to take over Canada's PotashCorp - the world's biggest fertiliser producer - also remained in the spotlight.

Potash, which has rejected the hostile approach, said it had been approached by third parties since news broke of BHP's US$40bn (€31.6m) bid.

Other miners on the rise included Lonmin, up 24p to 1531p, and Anglo American, 23.5p ahead at 2376p.

After a shaky start, gas explorer and production group BG held on to last week's stellar gains seen on speculation that two possible bidders were willing to pay at least £16 a share, valuing the company at around £54bn (€66.2bn). It was ahead 1.5p at 1096.4p.

In the FTSE 250, Lloyd's of London insurer Amlin lost 3%, down 13.7p to 408.2p, as its half-year results missed analyst expectations.

The group's profits slumped 39% after it was hit by the Chilean earthquake and windstorm Xynthia in Europe.

Rival Hiscox also suffered from claims relating to the natural disasters, but shares were 1% up - 3.3p higher at 347p - as interims topped market forecasts.

The pound rose to an eight-week high against the euro amid ongoing concerns over the state of European recovery, after the preliminary composite purchasing managers index for the eurozone fell to 56.1 in August from July's 56.7.

But the pound slipped against the dollar to 1.55 as a slide in US markets suggested a chill in demand for risky assets.

The biggest Footsie risers were Aviva up 13.5p to 391.2p, Petrofac ahead 48p to 1410p, Old Mutual up 3.9p to 124.9p and Sainsbury ahead 10.7p to 366.5p.

The biggest Footsie fallers were Aggreko down 41p to 1467p, Eurasian Natural Resources off 19.5p to 849p, Inmarsat down 11p to 659p, and African Barrick Gold off 9p to 563p.

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