MARKET REPORT: Takeover speculation puts the racket under Aviva

Aviva has become the latest big name to find itself at the center of takeover rumours.

FTSE 100 Aviva listed shares jumped 5.3 percent, or 20.7p, to 409p after reports indicated three overseas bidders were considering a bid.

Germany’s Allianz, Intact Financial Corporation of Canada and Scandinavian group Tryg are among those believed to be interested. At least one is said to be considering an offer of £6 a share. Aviva declined to comment.

But that hasn’t calmed speculation in the City.

“Is Aviva the next FTSE 100 takeover target? The market certainly seems to think so,” said Russ Mould, chief investment officer at AJ Bell.

“Aviva remains one of the many stocks in the UK market that look unloved but still offer potential for long-term value generation.

“One of the obvious times to buy a company is when it has made solid progress with a recovery program, as this de-risks the investment case.

“Aviva has shed the shackles of being a conglomerate and sharpened its focus as a result of asset disposals and a new push for growth, making it a stronger business. Naturally, this makes him more attractive to a potential suitor.

Aviva already won a vote of confidence earlier this week from the City when Jefferies raised its rating to ‘buy’ from ‘hold’ and raised its price target to 480p from 445p.

Insurer gains filtered through the blue-chip index, with rivals Legal & General up 3.2%, or 6.7p, to 217.1p, Prudential adding 1.5%, or 12.4p, to 867.6p , Beazley rose 1.7%, or 9p, to 542p and Phoenix increased 1.9%, or 8.9p, to 467.1p. The FTSE 100 rose 0.6%, or 43.04 points, to 7,494.58 and the FTSE 250 rose 0.8%, or 132.34 points, to 17,732.32.

Oil prices stabilized further at the end of a tumultuous week, with Brent crude hovering around $84 a barrel. But the prospect of lower fuel costs has proved beneficial for airline stocks.

Easyjet rose 2.5%, or 11p, to 449.3p, IAG added 0.8%, or 1.25p, to 156.35p and Wizz Air rose 0.6%, or 10.5p, to 1930.5p.

Shell also posted gains after reporting improved third-quarter trading conditions for its gas business.

Michael Hewson, chief market analyst at CMC Markets, said: “With the sharp rise in oil prices seen since June, you would have expected to see a significant improvement in oil margins in the quarter, but this was little mentioned in today’s production update. ‘

Shares in the oil giant rose 1.9%, or 49p, to 2,581.5p.

Investors in De La Rue took heart after the banknote printer raised its profit forecast for the six months to the end of September. Shares rose 1.5%, or 0.9p, to 61.4p.

SRT Marine Systems, which provides fisheries monitoring surveillance, sank 6.8 per cent, or 3p, to 41p after saying it was likely to post a loss of £4.5m for the six months to the end of September .

Petra Diamonds was an even heavier loser as the firm, which mines in South Africa and Tanzania, fell 9.3%, or 6.2p, to 60.8p after a drop in the selling price of its gems.

Spirent Communications sank into the red in what can only be described as a dark week.

The FTSE 250 firm, which is testing 5G mobile and Wi-Fi networks, tumbled 31 percent on Wednesday after it issued a profit warning and said the telecoms market was “extremely challenging at the moment” with its biggest customers downsizing expenses.

Spirent Communications fell a further 2.2%, or 2.1p, to 91.7p yesterday after Deutsche Bank Research cut its price target to 110p from 200p.