Newspaper article The Evening Standard (London, England)

Talk of Returning Suitor Adds Glitter to Xstrata

Newspaper article The Evening Standard (London, England)

Talk of Returning Suitor Adds Glitter to Xstrata

Article excerpt


Investors took a shine to Xstrata today amid rumours that the mining giants former suitor has returned.

Talk is Brazilian miner Vale is looking to pick up a 29.9% stake in the Anglo-Swiss group, tempted by the recent heavy sell-off in its shares. Vale walked away from a takeover deal in March when its indicative offer valued Xstrata at ?43 billion, a far cry from its current market capitalisation of ?12.8 billion.

The shares surged by more than 100p today, before giving in to profit-taking, after Xstrata released a solid set of third-quarter production figures. Brokers noted it had made the wise deci-sion to suspend high-cost operations in response to falling commodity prices.

Analysts at UBS have named Xstrata their top mining pick, rating the shares a buy alongside rivals Anglo Ameri-can, which today marked time at 1360p, and Fresnillo, 4.5p dearer at 159.4p. Numis also advised clients to stock up on Xstratas shares, noting that it is trading at a discount to its peers thanks to rumours over the state of the finances of its biggest shareholder, Glencore International.

Just under a week ago, Xstratas shares plunged to a three-year low on talk Glencore was looking to sell its 35% holding. Sources have since dismissed the rumours. But despite the string of good news, Xstratas gains were reined in to 52p at 1089p.

The FTSE 100 came off the boil after Wall Street opened in negative territory, and as an easing in the oil price ate away at the energy sectors early lead. It was down 13.08 at 4269.59 while the Dow sank 45.48 to 9219.95.

British American Tobacco claimed the wooden spoon among top stocks, falling 102p to 1612p after Richemont reported to the market for the first time since spinning off its stake in the cigarettes giant. Ninety per cent of the BAT stake will be distributed to shareholders next month with the rest held in a new investment vehicle.

Without the much longed-for boost to the insurers that Prudentials trading statement provided sending Legal & General up 5. …

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