Online grocery group Ocado was the top riser in the London market on Thursday as talk swirled about a potential takeover.
Shares in the distributor soared 28.5p to 348p after Deutsche Bank said it could become a bid target if rival grocery supplier Amazon Fresh launches in the UK.
The German investment bank said in a note: "If Ocado’s sales growth and profit suffer due to the launch of Amazon Fresh (as we expect they would), we think Ocado could become a potential target.
"However, Ocado’s performance would have to deteriorate significantly before this became likely."
Ocado, which distributes Waitrose products and provides an online delivery service for Morrisons, is potentially facing more competition.
It reportedly has already warned Morrisons against trying to launch its own delivery service because of the 25-year contract that exists between the pair.
Deutsche Bank added: "The potential launch of Amazon Fresh in London could negatively impact Ocado’s sales growth and profitability.
"We expect Amazon Fresh to target high-end customers and hence have considerable overlap with Ocado."
The FTSE 100 Index fell 22.96 points to 6206 in the first hour of trading, but that was still a four-week high after Wednesday's positive reaction to upbeat UK job news.
The Fed's decision was expected to eclipse other economic news such as UK retail sales, which rose 0.2% in August versus 0.1% in July.
Chris Williamson at economic data group Markit said: "Sluggish growth of retail sales adds to the recent flow of economic data which point to a slowing in the UK economy."
Fed fund futures imply a less than 25% chance of a hike while analysts and economists polled are 50/50, said Mike van Dulken at Accendo Markets.
Craig Erlam at forex group OANDA said a rate rise would shock markets. He said: "If the Fed is still tempted to test the water while minimising the shock, it could opt to raise by only 10 basis points today and do another 15 basis point hike in December."
Theme park and tourist attraction operator Merlin Entertainments (LON:MERL) dropped 0.1p to 382.6p as it said downbeat trading in its theme park business could continue to impact profit into next year.
Regional airline group Flybe (LON:FLYB) ascended 3.25p to 85p after introducing an ATR 72-600 aircraft into its fleet to operate domestic and regional routes under contract to Scandinavian carrier SAS.
Shares in Constellation Healthcare Technologies (LON:CHT) were flat at 144p as the provider of support services to US hospitals and clinics said it was on the lookout for more acquisitions.
Shanta Gold (LON:SHG) sparkled 0.25p to 4.38p as the East Africa-focused gold producer, developer and explorer said production and costs were still at budgeted levels and it was on course to hit full-year guidance.
Graphene Nanochem (LON:GRPH) rallied 1.25p to 19.75p on news of a US$390,000 order for its PlatQuartz lubricant additive from Scomi Oiltools. It will be deployed to an oil and gas company in India for a 3-well drilling programme.
MARKET PREVIEW
Not exactly Christmas, but the day the market has spent months waiting for is now here – and there’s probably a fair chance of disappointment.
Later this evening, after trading in London has finished, US Federal Reserve chair Janet Yellen will reveal whether or not American interest rates will be increased.
Wall Street closed Wednesday higher, again, and it would appear that traders are betting that the economic conditions are still not quite right for the Fed to raise rates.
“This is the most highly anticipated Fed decisions in years and investors, analysts and economists everywhere are split on whether the central bank will raise interest rates this month,” said Craig Erlam, analyst at OANDA.
“The markets on the other hand seem pretty convinced, which is quite surprising given the repeated warnings from Fed Chair Janet Yellen that the intention is to raise rates this year.
“Markets are currently pricing in a less than 25% chance of a rate hike at today’s meeting which is quite surprising and leaves them open to quite a shock if the Fed does proceed as warned.”
The Dow Jones gained 140 points, 0.84%, to close at 16,739 while the S&P 500 ended 0.87% higher at 1,995 and the Nasdaq moved up 0.59% to 4,889.
In Asia, Japan’s Nikkei advanced 1.55% to 18,454 while Hong Kong’s Hang Seng added 0.77% to 22,456 and the Shanghai Composite index edged up 0.28%.
Australia’s ASX 200 climbed 46 points, 0.9%, to 5,144.
In the commodity market the price of oil rallied strongly – Brent crude gained over 4% back up to US$50 per barrel – and the gold price was also moved higher, to around US$1,120 per ounce.
In London, IG Markets is calling the FTSE 100 up about 16 points this morning at 6,256 to 6,261.
IN THE PAPERS
Altice, a cable TV group controlled by Franco-Israeli billionaire Patrick Drahi, has struck a US$17.7bn takeover deal for US group Cablevision, the Financial Times reports.
The FT also highlights strengthening competition for cab app Uber. It reports that Uber’s main competitors in America and China respectively - Lyft and Didi Kuaidi – signed an alliance deal which lets their customers use the others services.
In a separate article the FT reports that French ‘ride sharing’ app firm BlaBlaCar has just raised US$200mln in a venture capital funding round, which has valued the tech-firm at €1.4bn.
MPs have called for a Serious Fraud Office probe into Lloyds Bank and one of its property advisors in relation to potential abuses of the insolvency process, The Times says.
The Times also says Serco has lost £100mln after selling an Indian call centre business it acquired back in 2011.
Britain is facing a diesel drought, according to The Telegraph, which says a surge in diesel car sales and fewer UK refineries means the country is increasingly dependent on foreign imports of the fuel.
The Telegraph also highlights that News Corp has sealed its £114mln deal to acquire advertising platform.