ARM Holdings soars as Intel numbers prompt new wave of bid talk

ARM Holdings was London's best-performing blue-chip today, boosted by bid speculation and strong results from American giant Intel.

The microchip designer has long been touted as a bid target, and this time it was said to be on the shopping list of Intel, which delivered bumper profits last night. One trader was sceptical, however. "We reckon if Intel were bidding it would take two years to pass the antitrust laws," he said.

There has also been wild speculation this year that iPad maker Apple was taking a look at Arm — a rumour on which dealers poured scorn. Either way, Intel's strong figures were seen as positive for Arm, helping its shares up 11.3p to 320.3p.

Goldman Sachs raised its price target for the stock from 260p to 350p, although it kept a "neutral" rating.

The rest of the chipmakers were also boosted, with CSR 10p dearer at 401.8p and Imagination Technologies Group 3.7p higher at 323.3p.

The FTSE 100's six-day rally looked set to end today, with the benchmark losing 25.96 points to 5245.06. The mood wasn't helped by news that borrowing by Spanish banks from the European Central Bank surged in June to another high.

GlaxoSmithKline was under the spotlight amid speculation that the drugs giant has agreed to settle the majority of lawsuits which claimed that its diabetes drug Avandia causes heart attacks and strokes. Bloomberg claims it is coughing up around $460 million (£301 million) to resolve the cases. GSK's shares ticked up 3½p to 1180p.

Rival drug maker Shire shot up 26p to 1489p. Credit Suisse has upped its rating on the shares to "outperform", arguing that the company provides "topline growth at a reasonable price".

Compass Group, the caterer keen to distance itself from its past when it fed Turkey Twizzlers to the nation's schoolchildren, jumped 10½p to 563p. Citigroup advised snapping up Compass, saying its shares looks more attractive than those of French rival Sodexo.

"We prefer Compass for its superior growth, higher margins, scope for bolt-on acquisitions and higher exposure to a cyclical recovery," said Citi.

Aggreko dropped 20p to 1617p after the temporary power company's shares hit a year's high yesterday. Its shares have been boosted this month by vague speculation that a possible predator might be taking a look, with Swiss giant ABB mooted last week.

Hedge-fund giant Man Group also benefited from bid talk. Its shares nudged up 1.6p to 222.6p on speculation that Man could have found itself on the shopping list of a US bank. Bank of New York Mellon was one name being touted as a possible suitor, with talk of a 320p-a-share bid.

Icap shed 22.3p to 413.9p after the interdealer broker said volumes had slowed last month, following a busy May. But elsewhere in the financial sector, an update from emerging markets fund manager Ashmore was better received. It shares leapt 12p to 276p after reporting that assets under management had risen by 7% to $35.3 billion, beating City forecasts, thanks to investors flocking back.

Also on the mid-tier, ITV lost 2p to 52½p owing to advice from Bank of America Merrill Lynch's analyst Daniel Kerven — a long-term critic of the Coronation Street broadcaster's "free-to-air" policy — to ditch the shares.

Checks were out of style in the City, with fashion house Burberry retreating 18½p to 800p. Deutsche Bank has cut its rating on the shares from "buy" to "hold" after the luxury label's trading update yesterday.