Rio Tinto was on the rise today on hopes that BHP Billiton is about to come out with an improved takeover proposal.
BHP has been given a February 6 put up or shut up deadline by the takeover panel, and the talk today was that it planned to put up.
Analysts at Evolution Securities summed it up nicely: "Rumours that BHP is set to make a formal bid for Rio have been fuelled in the past few hours by a 35% increase in BHP's credit default swap spread. The increase suggests it has become a more risky prospect - probably due to the size of the offer.
"Reports suggest that BHP will need around $60bn to finance the deal, which will also cover Rio's purchase of Alcan last year for $38bn. Noticeably the BHP CDS market has widened considerably since the start of the year adding a further 30 basis point, in anticipation of a sweetened offer for Rio."
Rio is 199p higher at £46.78 while BHP is 12p better at £13.61.
A Rio-inspired revival in the miners has helped the FTSE 100 move higher, up 31.4 points to 5933.8, shrugging off the latest credit crunch and US recession worries.
But a profit warning from New Star Asset Management, down 31% to 101p, and worries about property funds has hit the financials. A host of businesses made a point of saying they were not following the lead of Scottish Equitable which has shut its doors to withdrawals, but to little avail.
Standard Life slipped 8p to 218p, well below its flotation price, and Prudential fell 21.5p to 612p, despite both saying liquidity at their funds was fine.
