Market Report: Chinese bid chatter puts bounce back in BG Group

As a rallying blue-chip index left no stocks in the red last night, BG Group was among those bouncing after Chinese bid rumours made a return.

Frequently discussed as a potential takeover target, the energy explorer was lifted 77p to 1,221p with vague speculation once again linking it with a possible approach from the Far East.

Talk earlier in the month suggested BG could sell a stake in its Brazilian operations to one of China's oil groups, but yesterday the chatter revolved around a potential bid from the country for the whole company.

With gossips claiming any approach could spark a number of other companies into action, Chinese energy producer CNOOC was one of the names mentioned, although traders noted it was no means the first time the two have been linked.

They were similarly dismissive of vague chatter putting forward both BHP Billiton – up 128.5p to 1,875.5p – and Royal Dutch Shell – up 76.5p to 2,036p – as potential predators, while speculation over a possible price veered wildly, rising as high as 2,400p a share.

After two days of nervously edging forward, the FTSE 100 finally managed a significant jump, climbing 204.68 points, or 4.02 per cent, to 5,294.05. Sentiment was improving over the chances of an effective rescue plan for the eurozone being agreed by the region's leaders and the IMF, although traders were hardly falling over themselves with enthusiasm.

"There is confidence they are grasping the nettle," said one, "although whether they are doing the right thing remains to be seen.

Having led the benchmark index's recent march down, the mining sector was managing to recover some of its major losses. Vedanta Resources' charge forward of 126p to 1,196p left it in the gold medal spot, while Antofagasta was not far behind, putting on 102p to 1,052p.

Silver and gold were both on the rebound, prompting Fresnillo up 157p to 1,681p, as the precious metals miner was given a helping hand by Citigroup's Jon H Bergtheil removing his "sell" rating.

The banking sector was still rising, with Barclays powering up 12.45p to 168.45p while Lloyds advanced 1.79p to 37.02p. However, they were receiving little support from the analysts at their peer Royal Bank of Scotland, 1.44p stronger at 25.01p, who said the UK banks "will need to materially alter their business models" to cope with the Independent Commission on Banking's recent recommendations for the industry.

The well-worn tale that the Qatar Investment Authority may increase its 26 per cent stake in Sainsbury had cold water poured on it by HSBC's Jerome Samuel. The analyst said such a scenario was "unlikely" as he cut his target price to 310p, although the supermarket still ticked up 7.4p to 278.3p.

The scribbler also raised his rating on Tesco – 13.1p better off at 384.5p – to "neutral", saying he was now "more confident about [its] ability to protect margin in the UK".

Having failed to move the engineer on Monday, vague bid rumours of possible interest from ArcelorMittal helped Morgan Crucible rise 9.61 per cent, with the engineer powering up 22.1p to 252.1p on the FTSE 250.

It was nowhere near as big a move as that enjoyed by International Personal Finance, however, which rocketed 28.8p to 225.3p after JP Morgan upgraded its recommendation on the lender to "neutral" from "underweight".

Ocado managed to advance for the first time in six sessions, charging up 7.45p to 98.45p. The online grocer hasbeen knocked recently by a price war among the supermarkets, but there was better news as non-executive director Jorn Rausing embarked on a round of share buying.

Bullish comments from Goldman Sachs saw Imagination Technologies driven up 27p to 450p. Scribblers from the broker said the chip designer was set to benefit from expectations its licensee Texas Instruments' technology will be central to Google's latest version of its Android mobile operating system.

The decision by South African authorities to suspend its mining licence led Central Rand Gold's share price to plummet. Dropping 56 per cent to 0.22p on the fledgling index, the gold digger said operations had halted as a result, with reports claiming it allegedly failed to stick to the conditions of the license.

The nightclub operator Luminar also suffered a major sell-off, sliding 1.18p to 0.95p, after saying bid approaches it had received "would not realise any value for ordinary shareholders".

However there was more positive takeover news on the Alternative Investment Market, where Clarity Commerce Solutions shot up 6.25p to 21.5p in the wake of receiving a 23p a share offer from Enigmatic Investments, which already owns a 9.22 per cent stake in the retail software group.