Real estate shares surge as bid for CSC sparks appetite

BRITAIN’S leading shares pushed higher yesterday, buoyed by strength in heavyweight miners and banks, and by gains from real estate issues as Capital Shopping Centres bounced on bid interest.

At the close, the FTSE 100 was up 41.83 points, or 0.7 per cent, at 5,698.93, dipping back in the closing auction after hitting a late-afternoon peak above 5,700.

Volumes were light, however, at 64 percent of the 90-day moving average, lacking US participants, with Wall Street closed for the Thanksgiving Day holiday.

“Markets are quiet, with the American celebrations creating ... a chance for getting in a practice long lunch ahead of the pending entertaining season,” said Will Hedden, a sales trader at IG Index.

“Much the same can be expected tomorrow, with perhaps a slight improvement in the afternoon when America drags itself out of bed ... to finish early and hit the shops for the official start of Christmas shopping season on ‘Black Friday’.”

Real estate investment trusts were strong risers on the blue-chip and mid-cap leaderboards after the largest US mall owner Simon Property flagged a potential offer for Capital Shopping Centres (CSC) in which it currently holds a 5.6 per cent stake, sending CSC’s shares up 12.9 per cent.

On Wednesday, CSC said it was in talks to buy Manchester’s Trafford Centre shopping mall for £1.6bn from Peel Group, which would see Peel end up with around a 20 per cent stake in CSC. The CSC bid speculation boosted sentiment towards the sector, with blue chips Hammerson and British Land up 4.8 and 2.9 per cent, while mid-cap Capital & Counties gained 4.6 per cent.

Banks were higher as recent concerns over European sovereign debt exposure eased further, with Lloyds up 0.5 per cent, Royal Bank of Scotland up 0.7 per cent and global sector heavyweight HSBC up 0.6 per cent.

Mining was the strongest sector, extending Wednesday’s rally as metal prices recovered.

Anglo American added 2.7 per cent, Rio Tinto gained 2.2 per cent, and Xstrata firmed 2.1 per cent.

Insurer Old Mutual added 2.12 per cent, with traders citing an upgrade in Goldman Sachs’s investment recommendation to “buy” from “neutral” as part of a European sector review.

A broker upgrade also aided Marks & Spencer, up 2.4 per cent, with Arden Partners raising its rating on the shares to “buy” from “neutral”, citing supportive trading conditions.

Oil explorer Cairn Energy gained 3.5 per cent as Oriel Securities upgraded its rating to “add” from “hold”. Cairn also got a lift after an Indian oil ministry source said the firm had sought the Indian government’s approval to switch control of three producing blocks to Vedanta Resources, a key step in sealing the sale of its Indian assets.