Market overview: Traders react coolly to BG takeover bid

1630:Close UK shares ended the session lower despite a massive £47bn buy-out offer from Royal Dutch Shell for BG Group. The deal got a cool reception from markets, with stock in BG ending the day at 1,153p, well off from the 1,350p a share price at which the offer valued it – for a stonking 50% premium. The news drew sceptical remarks from analyst Neill Morton at Investec. He wrote to clients saying that: “The deal is predicated on a strong recovery in oil prices ($90/bl from 2018), while we suspect that Shell is pouncing on BG’s imminent free cash flow to protect its burdensome dividend payout.” Acting as a backdrop, traders were wary ahead of the release of the minutes of the US Federal Reserve’s last policy meeting on 17 and 18 March. Crude futures ended with a sharp decline. FTSE 100 down 24 points to 6,937.41.

1620: Commercial US crude oil inventories jumped by 10.7m barrels over the seven days ended on 3 April from the previous week, to stand at 482.4m barrels. That was their highest level for this time of year for 80 years, according to the Energy Information Administration (EIA), the US Department of Energy’s (DoE) statistical arm. Front month West Texas crude futures were down by over 4% at last count.

1618: Investec's Neill Morton on Royal Dutch's bid for BG: "The deal is predicated on a strong recovery in oil prices ($90/bl from 2018), while we suspect that Shell is pouncing on BG’s imminent free cash flow to protect its burdensome dividend payout."

1528: Other newswires have apparently picked up on the rumours surrounding ARM Holdings. The stock is now in second place on the leaderboard.

1506: There is market chatter doing the rounds citing a report out of China that Apple might attempt to take out ARM Holdings at 1,500p per share.

1437: Anti-trust issues will likely keep the bigger players in the oil patch from combining. Hence, don't get carried away with talk of a wave of M&A in the sector, that already happened abouyt 15 years ago. However, tie-ups are necessary among the mid-sized and smaller players, especially in he E&P sector. The top five most probable candidates amongst UK listed companies are: Tullow Oil (West and East Africa), Ophir Energy (East African gas), Dragon Oil (massive cash balance), Genel Energy (Kurdistan) and SOCO International (SE Asia), say analysts at Westhouse Securities. "Stocks such as Circle Oil, Faroe Petroleum, Rockhopper Exploration, Ithaca Energy, Bowleven, Parkmead, Lekoil and Chariot Oil & Gas are all candidates for takeover given their depressed valuations relative to their portfolios," they add.

1436: Market sources tell Sharecast that Aviva’s decision not to renew its bancassurance agreement with DBS bank makes sense and should have been largely priced into the stock already, despite the apparently negative share price reaction to the announcement today.

1358: Commenting today on the iron ore price and its potential implications for miners' shares Jefferies says: "As we had expected, the iron ore price has fallen elow $50/per tonne. Fundamentals are weak and the price is likely to stay lower for the next 2+ years. Shares of the Big Three iron ore miners (Rio, BHP and Vale) have been resilient to the most recent decline in iron ore, but this resilience may not continue in the near term. A better opportunity to buy BHP and vale should emerge. We are more positive on shares of Rio but would aboid shares of FMG for now."

1331: Interesting bit from Deutsche Bank on cruise-line operators, including Carnival: "With all the cruise lines talking up demand and with lower estimated capacity to sell in the Carribean during the second half of 2015, coupled with increasing deployment in Asia where yields are currently attracting premiums, we think the underlying fundamentals for further cruise sector share price out-performance remains intact despite recent negative FX trends." Morgan Stanley has today lifted its target on the stock to 3300p from 3100p, while sticking to its equal-weight recommendation.

1330: Three-month copper futures are 0.1% higher to $6,029.50 per metric tonne on the LME.

1329: JP Morgan has cut its coal price forecasts The impact on BHP will be more meaningful than on Rio Tinto given its greater coal exposure. “RIO remains our preferred diversified miner based on more supportive valuation metrics,” the broker’s analysts add.

1221: The People's Republic of China is drawing up plans to subsidise its iron ore sector, according to the Shanghai Securities News, Reuters reports.

1113: On Wednesday morning Friends Life issued a statement saying its stock should not trade ex-dividend ahead of 9 April Scheme Record Time and Friends Life Dividend Record Date. The company also noted the sharp move in its stock price. In parallel some reports were indicating that the firm had gone ex-dividend due to an administrative error.

1105: Report attributed to FT states that attempt by Exxon Mobil to break-up a merger between Royal Dutch Shell and BG Group is not out of the question.

1000: Eurozone retail sales slipped by 0.2% month-on-month in February, as expected. The previous month's gain was revised lower to show a rise of 0.9% versus a preliminary estimate of 1.1%.

0955: Stock in Tullow Oil , Ophir Energy and Soco International are among the best performers on the FTSE 250 in the wake of the Royal Dutch Shell-BG news. They were also among the best performers yesterday, as was BG Group.

0900: UK stocks have begun the morning higher bolstered by Royal Dutch Shell’s impromptu take-over offer for BG Group. Over on the continent equities are somewhat flattish, following on from last night’s downdraft seen on Wall Street in the last five minutes of trading, which may be telling in itself. Some big research houses have noted the weakfish tone in yesterday’s session in 10-year US Treasury yields. That comes ahead of tonight’s Fed minutes and quarterly earnings from Alcoa. Recent strength in the US dollar has gouged analysts’ estimates for corporate earnings this quarter.