Market report: Investors hanging on for TalkTalk bid fear divi cut

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The patience of investors hoping a larger rival can end TalkTalk’s stock-market misery with a takeover was tested again today as the shares fell further on fears of a cut in the dividend.

Analysts at JPMorgan Cazenove fuelled concerns that the struggling FTSE 250 telecoms firm, whose shares have slumped 20% since its weak half-year results two weeks ago, could halve the shareholder payout.

This is despite chief executive Dido Harding insisting it would hand out as much as it did last year.

“In light of the current trading environment, we believe a more conservative dividend policy… would be appropriate,” said JPMorgan’s Matthew Bloxham.

TalkTalk, whose £10 million-a-year deal to sponsor the X Factor is coming to an end, has long been considered a potential takeover target by the City, but Bloxham argued potential buyers are in no rush to swoop.

“Whilst we consider TalkTalk a potential mid-term target for a larger UK operator, we believe the priorities of potential bidders currently lie elsewhere,” Bloxham said.

His downgrade to underweight caused the shares to tumble 8.7p, or 5.5%, to 151p, their lowest level in four and a half years.

The oil rally sparked by Opec’s deal to cut production started to lose steam, taking the edge off the FTSE 100, which slipped 40.95 points to 6742.84. 

A further slowdown in UK manufacturing last month also weighed on sentiment.

But this week’s oil-price rally continues to help shares in Big Oil, lifting Royal Dutch Shell 51.55p, or 2.4%, to 2170.05p.

BP was also in favour, up 12.35p to 471.8p, with an upgrade to outperform from Credit Suisse helping the shares higher.

The investment bank said the oil giant is now “out of rehab”, having slimmed its portfolio since the 2010 Deepwater Horizon disaster. 

On the mid-cap index, Brent’s rise eased the pressure on troubled oil services firms. Hunting was 27p better off at 567p.

Ascential sank 12.2p, or 4.4%, to 264.1p after Guardian Media Group and private-equity firm Apax together dumped £172 million of shares in the Cannes Lions festival owner at 260p each, 60p higher than February’s float price.

Clipper Logistics, the click-and-collect services provider, stormed to all-time highs as it rose 10.5p  to 372.5p on the back of strong half-year results.

Elsewhere, tech recruiter firm InterQuest dived 3.25p, or 9.5%, to 31p after its second profit warning since the Brexit vote amid a hiring slowdown.

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December 2, 2016 |
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