FTSE 100 movers: LSE surges as ICE says mulling offer; Ashtead and Barclays tank

London Stock Exchange racked up stellar gains on Tuesday as Intercontinental Exchange confirmed it is considering making a bid for the UK exchange to rival Deutsche Boerse’s.

ICE, which owns the New York Stock Exchange, said no approach has been made yet and there can be no certainty any offer will be made.

Meanwhile, LSE confirmed it had not received a proposal from ICE and said discussions with Deutsche Boerse regarding a potential merger of equals continue to progress.

The Wall Street Journal also reported on Tuesday that CME Group, which operates the Chicago Mercantile Exchange, was mulling a takeover bid for LSE.

“Those buying into LSE are hoping that a bigger US appetite for LSE’s operations will be rewarded with an even higher offer than the £20bn merger of equals with DB that is currently on the table and which would result in the biggest exchange in Europe; a genuine rival to US markets,” said Mike van Dulken, head of research at Accendo Markets.

Insurer Direct Line was also a high riser after it said gross written premiums from ongoing operations rose 1.7% in 2015 to £3.5bn. The company saw 4.8% growth in its motor division for the year and 7.1% in the fourth quarter.

Direct Line's operating profit from ongoing operations increased to £520.7m for the year, from £506m in 2014. The combined operating ratio of 94% for the period was an improvement of one percentage point.

Rio Tinto gained after the miner said it has sold its 40% interest in the Bengalla coal joint venture in Australia for US$616.7m (£443m).

The sale was enabled after Rio took its stake in Coal & Allied from 80% to 100% on 3 February as part of the restructuring of the coal group, which means it will receive the entire consideration from its interest in the Bengalla JV and from its recent sale of the Mount Pleasant project for $224m plus royalties.

Equipment rental firm Ashtead was the worst performer on the FTSE 100, with analysts pointing to concerns over the company’s plans to cut capital expenditure next year, as it reported a jump in third quarter profit.

For the quarter ended 31 January, statutory pre-tax profit rose 16% to £133.5m on revenue of £612.2m, up 15% from the year-earlier period.

In the first nine months of the year, pre-tax profit was up 20% at constant exchange rates to £482m despite the slowdown in oil and gas markets that provided a headwind which will continue in the fourth quarter.

However, analysts said the company’s decision to cut capital expenditure next year might be seen as painting a negative picture of the US economy, where the group derives most of its profits.

Charles Huggins, investment analyst at Hargreaves Lansdown, said: ‘Ashtead generates the bulk of its profit in US non-residential construction markets where conditions remain favourable - for now. However, the market is clearly worried about a potential US slowdown. Ashtead’s plans to cut back capital expenditure and reduce leverage are sensible in this context, but do little to allay investors’ concerns of tougher times ahead.”

Barclays also suffered heavy losses after it confirmed plans to sell its African business as it announced a drop in full year profit and a large cut to the dividend.

For the year to 31 December, adjusted pre-tax profit slipped 2% to £5.4bn and the bank announced a £1.45bn provision for PPI misspelling. Economists had been expecting the bank to report a profit of around £5.8bn.

In addition, it said it will slash its dividend by more than half to 3p per share this year and the next.