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FTSE comes within 20 points of 6000 as Arm jumps 9% on Microsoft talk(Guardian Web Via Acquire Media NewsEdge) As leading shares moved higher for the third day - and ever closer to the 6000 level - one of the standout performers was Arm. The chip designer jumped 9% - up 36.8p to 440.3p - following reports that Microsoft planned a new version of its Windows operating system which would run on Arm's processors. Such a move - expected to be unveiled at a trade fair in early January - follows an announcement in July that Microsoft had unexpectedly taken an Arm processing licence. RBS analyst Didier Scemama said such a deal would be "a game changer" for the company. He said: While Windows Phone 7, Microsoft's smartphone operating system, runs exclusively on Arm, Windows 7 (and its predecessors) runs exclusively on Intel's architecture. Microsoft has so far refused to support ARM-based processors for Windows. Although the [reports] indicate that Microsoft would only support Arm for tablet PCs, we believe it could be a first step before a full support for notebook, desktop and server computers. This could also indicate that Microsoft wants to compete more effectively against the success of Apple's iPad/iOS and upcoming Android tablet PCs, which are cannibalising Windows operating system sales. We remain buyers of Arm with a target price of 430p. Also benefiting was bluetooth and wi-fi specialist CSR, up 27.6p to 347.2p. Investment group Blackrock yesterday declared an 11.54% stake in the business. But Imagination Technologies, which is facing growing competition from Arm in the graphics chip sector, fell 6.1p to 371.8p. Although trading volumes were thin ahead of the Christmas break, the FTSE 100 continued its recent surge, finishing 31.69 points higher at 5983.49. There were mixed economic signals, with UK growth in the third quarter disappointing, but US GDP being revised upwards. However sentiment was helped by continuing talk of China helping to support Europe's struggling economies, with reports it planned to buy €4bn to €5bn of Portuguese government bonds. Angus Campbell, head of sales at Capital Spreads, said: Whilst the UK benchmark is within a few points of the magical 6000 level, the second tier index, which better reflects the state of corporate UK, is within touching distance of the all time high it recorded back in May 2007. Just one and a half trading sessions left before Christmas and the index has never looked more likely to break through 6000. This is a hugely significant psychological level and further indication that the bull market is intact. With Eurozone worries easing, banks moved higher. Royal Bank of Scotland rose 0.51p at 40.69p, while Lloyds Banking Group added 0.46p to 68.95p. BSkyB climbed 14.5p to 743p as traders bet that the bid from Rupert Murdoch's News Corporation was now likely to get the green light. This of course follows business secretary Vince Cable telling undercover reporters he had "declared war" on Murdoch, comments which led to him being immediately removed from any decisions about media policy. Culture secretary Jeremy Hunt - who will now make the BSkyB decision - is believed likely to be more favourable to Murdoch, although a reference to the Competition Commission may be politically expedient. Even so, broker Investec now believes there is now a 90% chance the deal will go ahead, although Murdoch will have to offer more than the 700p a share on the table. Analyst Steve Liechti said: Given EC competition go ahead [yesterday] and Vince Cable's disastrous and very public implosion, we move our Sky recommendation to buy. We believe the proposed take-over is now a lot more likely and move our probability adjusted share price target to 793p (was 700p). Our assumed take-out price moves marginally to 840p (was 800p) given strong operating performance, and we continue to assume deal completion at the end of the second quarter next calender year. Elsewhere Petrofac put on 24p to £15.80 as the oil and gas services company said it had begun work on the second phase of a gas processing plant in Turkmenistan, a deal worth $3.4bn. Cruise company Carnival climbed 154p to £30.59 in the wake of yesterday's better than expected fourth quarter figures. Evolution Securities issued a positive note on the business, with analyst Nigel Parson saying: Our buy recommendation is underpinned by the anticipated surge in free cash flow from 2011 but Carnival is also geared to recovery and is set for a good 'wave' peak booking season. We have upgraded our 2011 and 2012 earnings per share forecasts by 5%. The stock has performed strongly in the last three months (up 16%) but it's too early to jump ship. But SuperGroup slid another 29p to £12.32 on continuing concerns that the fashion retailer's future growth would not be as high as expected. The company is due to issue a Christmas update on 12 January. Micro Focus International fell 12.6p to 393.5p following news late yesterday that the IT company's chairman Kevin Loosemore and his wife had between them sold 200,00 shares - a third of their holding - at 406.75p each. Analyst George O'Connor at Panmure Gordon said: The market has been spooked by Kevin Loosemore, selling down a third of his holding. 'Following director dealings' has been long established investment strategy; however in this instance we note that Mr Loosemore sold shares following a house purchase. This looks cut and dry to us and we are delighted to report that there is nothing more behind the share sale. We remain relaxed about our ongoing buy recommendation. Lower down the market Eckoh, which develops speech recognition systems, added nearly 9.5% to 7.25p after it announced a deal with Whitbread. Eckoh has won a three year contract to provide a reservations and cancellations service for the leisure group's Premier Inn business. The deal is believed to be worth a minimum of £1m over the three years, with higher amounts possible depending on usage of the service. Analyst Tintin Stormont at the company's broker Singer Capital Markets said: This adds another big name to Eckoh's customer base, joining clients such as Transport for London, American Express and Vue Cinemas. (c) 2010 Guardian Newspapers Limited. |