Pru slides 8pc as FTSE 100 heads towards 5500

By Ben Harrington, Markets Reporter Published: 6:45PM GMT 02 March 2010

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The hold up declaration giant, that on Monday voiced plans to buy AIA for $35bn (�23.5bn) , tumbled an additional 8pc, call brokers to assume about either Prudential itself is right away "in play" in all if institutional investors are vehemently against to thought of appropriation the understanding around a rarely dilutive fundraising.

Market veterans remarkable that when NatWest attempted to buy Legal & General it was in the future snapped up by Royal Bank of Scotland. So, the speculation you do the rounds on Tuesday was that Clive Cowdery"s Resolution could group up with Aviva, that attempted to take Prudential in 2006, to mountain a corner bid for Prudential.

Sun shines on Tuesday"s Gilt marketplace Shares and Markets: News, charts, interpretation FTSE slip 1.4pc as ardour companies sojourn in concentration FTSE 100 enjoys the most appropriate run in over five years Segro set to take over Brixton in �100m understanding Cookson strike by debt and rights issue worries

However, Blair Stewart, researcher at Merrill Lynch, pronounced in a note to clients that in between "80pc and 90pc of the calls we perceived [on Monday] were in all understanding of the understanding and the longer tenure merits of owning the shares".

Mr Stewart, though, remarkable that the batch will be flighty until the exchange finish in early Jun as stream investors are less expected to be buyers over this duration in the believe that a money call is on the way. This incident presumably leaves "the shares some-more exposed ... to suppositional interest," pronounced Mr Stewart.

Indeed, the speak in the marketplace on Tuesday was that multiform sidestep supports were receiving poignant short positions in Prudential to put in place a "rights issue arbitrage" traffic forward of the money call.

Prudential sealed down 42 to 487p, Aviva ticked up 4 to 379.2p and Resolution remarkable time at 72.2p.

Overall, the FTSE 100 jumped 78.12 points to 5484.06 and the FTSE 250 surged 118.82 points to 9598.65. "Today"s move once again confirms that produce inspired investors are happy to place their supports in bonds as against to have it sitting in cash," pronounced Angus Campbell, head of sales at Capital Spreads.

ICAP fared well as UBS took up coverage with "buy" advice. Arnaud Giblat, researcher at UBS, argued ICAP should good from expansion in the derivatives market, that is driven by a cyclical liberation and physical drivers. Mr Giblat added: "We design regulatory changes to be a matter to interoperability, to larger direct for post-trade services and to an enlarge in electronification." The shares put on 15.2 to 343p.

Mr Giblat, though, was less certain about the London Stock Exchange (LSE). "We design LSE"s marketplace share in money equities to eat away to 40pc from 60pc today. However, the rated government group should be means to equivalent this by repositioning the charity and slicing costs." Still, the LSE changed 9 higher to 689p.

The researcher additionally took up coverage of Tullett Prebon with a "neutral" rating. "The batch is poor and that the voice-broking commercial operation indication will tarry change...but the company"s expansion is at risk since the changes the OTC markets will go on to experience," pronounced Mr Giblat. Tullett perked up 5.2 to 290p.

News that Lufthansa posted a higher-than-expected €130m in handling enlarge helped British Airways benefit 13.1 to 225p.

Banks were behind in practice as traders" risk ardour increased. Standard Chartered rose 64 to �15.90 and Barclays climbed 9.6 to 321.8p.

Only fourteen blue-chips finished the day in disastrous territory. They enclosed Vedanta Resources, that was one of the misfortune performers after it astounded the marketplace by rising a automobile down payment to lift $775m. Some traders thought the association could make use of the supports to enlarge the interest or bid for HudBay Minerals, a Canadian mining company. Liberum, though, remarkable the uninformed collateral is not for M&A. The attorney additionally forked out: "the marketplace perceives that the automobile down payment issue is driven by costs and timing overruns at the expansion projects, that seems erroneous".

Among the second liners, housebuilders were in foster after Fiona Morgan, the mother of Redrow authority Steve Morgan, paid for 100,000 shares in Redrow at 131pThe merger takes the Morgan family"s on all sides in Redrow to 29.9pc. Redrow rose 6 to 141p.

Meanwhile, clever formula from Persimmon helped it benefit 23.8 to 424.4p. Elsewhere in the sector, Bovis Homes Group perked up 19.1 to 385.2p and Taylor Wimpey climbed 1.8 to 37.9p.

SIG put on 2 to 121.4p on speak the Canadian IKO Group is adding to 4.2pc interest in the business. Provident Financial strew 52 to 919p as it purebred a lower-than-expected distinction for the full year.