Market Report: Rolls-Royce rises on submarine nationalisation hopes

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Reports that the Government is considering nationalising its submarine division breathed life into Rolls-Royce’s sinking share price.

The FTSE 100 aerospace and defence engineer, whose submarine business powers the Trident nuclear deterrent, gained 8p to 560p on reports the Government is thinking up ways of defending it against an overseas takeover given its vulnerability after five profit warnings in less than two years.

Other options for David Cameron’s office include merging some or all of Rolls with rival BAE Systems, up 3.9p at 494.4p.

Since Warren East was installed as Rolls’ chief executive in July, California-based activist investor ValueAct has strengthened its hold on the group, increasing its stake to more than 10%.

ValueAct is pushing for a seat on the Rolls board but insists it does not plan to derail East’s turnaround plan.

The FTSE 100 ended a dismal run of seven straight falls, climbing 42 points to 5994.78 at the start of a key week for global stock markets.


All eyes will be on Federal Reserve chair Janet Yellen on Wednesday (Picture: EPA)

On Wednesday, Federal Reserve chairman Janet Yellen will reveal whether the US will lift interest rates for the first time in more than nine years. Until then stocks are likely to tread water.

Investors have checked into InterContinental Hotels Group, which picked up 35.5p to 2530.5p.

Rival Accor snapped up the parent of Raffles and Fairmont in a $2.9 billion (£1.91 billion) deal and the City is hoping that IHG will be the next to be swept up by the wave of takeover activity in the hotels industry.

Supermarket stocks recovered from a bruising week, with Sainsbury’s helped higher by an upgrade to buy by broker Stifel, lifting it 8.7p to 243.7p.

Shares in FTSE 250 defence firm Cobham weakened 5p to 288.5p after broker Berenberg cut its rating to sell, concerned by its “stretched” balance sheet and “slower-than-anticipated working capital improvement”.

CityFibre dropped 9.5p to 57p after raising £80 million in a discounted share placing to fund its £90 million reverse takeover of larger KCOM, expanding its footprint to 36 towns and cities across the UK.

A profit warning from Tribal and a planned rights issue to raise £35 million from the education support services group, still without a chief executive, caused the shares, which will now trade on AIM, to plummet 24.38p, or 45%, to 30p.

Meanwhile, AIM-listed spoken-word content firm Audioboom, which counts property tycoon Nick Candy as a backer, slumped 0.88p, or 21%, to 3.25p as it warned on annual revenues.

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December 14, 2015 |
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