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UK Equities
Catlin gains on takeover speculation
From the Financial Times of Tue, 16 Dec 2014 23:29:51 GMT

Takeover speculation meant Catlin proved a haven in a volatile day in the London market.

Strong volume squeezed Catlin higher by 2.8 per cent to 582p amid rumours of a bid approach for the Lloyd’s of London insurer. Analysts also noted that, if Catlin finishes the year with no catastrophe losses, the group may be in a position to pay a special dividend next year.

Catlin has already bounced nearly 20 per cent from a one-year low hit following its interim results in August. The Bermuda-based group has long been viewed as a potential takeover target in the wake of the private equity buyout of peer Brit Insurance by Apollo and CVC in 2010.

Whipsaw volatility in the wider market left the FTSE 100 higher by 2.4 per cent at the close of trade, its biggest daily gain in more than a year. The index bounced off a 17-month low to climb 149.11 points to 6,331.83.

Oil’s recovery from around five-year lows meant Royal Dutch Shell B rose 5.3 per cent to £20.94 and Tullow Oil took on 6.3 per cent to 381.4p.

Afren rallied 9.2 per cent to 35.9p after reporting oil finds at an onshore Madagascar prospect. With Afren not yet providing resource estimates, analysts kept forecasts unchanged due to the area’s history of heavy oil finds with low recovery factors.

Smith & Nephew rose 3 per cent to £10.50 following news that Stryker, its putitative predator, had increased the size of a short-term debt fundraising to $1.25bn from up to $500m. Stryker has been free under Takeover Panel rules to bid for S&N since late November, having admitted in May it had been working on an approach.

The rouble’s collapse meant London’s Russia-exposed companies missed out on the day’s rebound.

Bottler Coca-Cola HBC slipped 0.9 per cent to £12.21, a record low for its London listing. Every 10 per cent change in the rouble’s euro value moves Coca-Cola HBC’s earnings per share by between 2.5 per cent and 3 per cent, Merrill Lynch estimated.

Polyus Gold, the tightly held Russian miner, slipped 0.8 per cent to a record low of 180p amid speculation of margin calls among big investors. More than three times Polyus’s average daily volume changed hands.

Nostrum Oil & Gas, whose main Chinarevskoye gas-condensate field is on the Kazakhstan side of the Russian border, sunk 9.4 per cent to 377p.

Sainsbury ended barely changed at 229.4p even after grocery industry data from Kantar suggested it was the biggest loser in a flat market over recent weeks. Sainsbury’s total fell by 1.9 per cent over the Black Friday trading period, suggesting like-for-like sales down nearly 4 per cent, with its market share down by 34 basis points year-on-year to 16.5 per cent.

Chipmaker Imagination Technologies rallied 16.3 per cent to 221p after its first-half results beat expectations thanks largely to higher than expected royalty revenue.

Restaurant chain Prezzo, which has agreed a 126.5p per share takeover, rose 0.2 per cent to 127.3p after Elliott Advisors declared an 11 per cent stake.

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