A revival in the miners and the banks and a smattering of bid speculation have all lifted the markets today.
Just when you thought the extended saga in the insurance industry involving Friends Provident, Standard Life, Pearl Assurance and Resolution might be coming to an end, it seems to have gained new life.
Friends Provident jumped 10.4p to 169.9p as bid speculation reemerged after its chief executive Philip Moore left the company and the board said it would conduct a strategic review. Word immediately went around about a possible bid of up to 230p.
To recap, Friends planned to merge with Resolution but this was disrupted when Pearl made a move on Resolution. Standard Life tried to muscle in on the Resolution deal but backed away earlier this week. Phew.
Now analysts believe Standard Life, steady at 256p, may turn its attention to Friends. Other possible predators include Italy's Generali, or Axa or Zurich Financial.
Friends' shares have recently been hit by short selling, with bond investors said to be trying to push the price down so they receive more cash when Friends repays them with a mixture of cash and shares in December.
Analysts at KBW explained it thus: "We believe some hedge funds started buying convertible debt and shorting Friends Provident shares aggressively last week, trying to maximise a top-up payment that could be also be paid under the terms of the debt. A top-up payment could be paid equal to 171p less the average share price for 30 working days up to December 5."
Among the other bid gossip, today's suggested predator for mining group Xstrata was said to be Glencore International, which already owns 35% of the company. As John Meyer of Fairfax commented: "This could mark the top of the market." Yesterday, all the talk was of a tie-up between Xstrata and Anglo American.
Miners were also lifted by a better than expected 11.4% profit rise from platinum producer Lonmin.
HSBC added 32.5p to 875p, despite revealing a $3.4bn hit from the US mortgage market as analysts took comfort from the bank's comments on the problems.
David Buik at Cantor Index said: "The market seems very comfortable with Stephen Green's and Michael Geoghegan's comments. Profits are likely to be ahead of forecast and there appears to be no measurable decline in its sub-prime lending position. However, there are caveats. If the housing market were to continue to deteriorate, then this could affect consumer finance within its subsidiary, Household, for which HSBC paid $15bn in 2003.
"All SIVs managed by HSBC have the requisite funding in place. HSBC deserves full credit for flagging up these issues last January, when the share price stood at 945p."
So with Wall Street and Asian markets soaring last night, the FTSE 100 was 90.5 points better at 6452.9. The Bank of England's inflation report also helped, hinting at further interest rate cuts to come.
Among the minnows, healthcare group Nestor slumped 47% after a profit warning, prompting revived talk of a possible bid from outsourcing specialist Mears.
But gas storage firm Star Energy jumped 29% after a £340m takeover approach from Malaysian oil and gas group Petronas, which holds 39%.
Seymour Pierce said the move could highlight the attractions of rival Egdon Resources, up 20p to 255p.
