Market Report: Shell's focus 'has switched to Afren'

City rumour-mongers couldn't stop shelling out gossip on Europe's largest oil producer. On Wednesday, whispers emerged that Shell could be taking a look at BG Group after its share price sunk. Then yesterday FTSE 250 Africa-focused oil and gas company Afren was said to be its target.

Afren has already been the subject of takeover talk this year. Italy's ENI and Exxon Mobil were rumoured to be interested then. Afren's shares yesterday spurted up 5p to 142.7p.

Royal Dutch Shell yesterday reported third-quarter profits of £4.5bn, down 6 per cent on last year. Shell said it saw a drop in oil and gas production and warned of difficult times ahead. Its shares gushed up 51p to 2,241.5p. But Investec's Stuart Joyner gave it a hold rating and a share price target of 1,936p.

BG, which slashed its production forecasts yesterday, got the wooden spoon for a second day as analysts downgraded the stock. It ended down 45.5p at 1,102p.

Traders with a taste for tittle-tattle picked another mid-cap index dweller and speculated that Ukraine-focused iron producer Ferrexpo could be the subject of a bid. Vague whispers that it could be taken private accompanied a share price rise of 10.9p to 219.8p.

The FTSE 100 was lifted by better-than-expected Chinese manufacturing data. Weak UK output figures didn't dent its gains and it jumped 79.22 points to 5861.92.

The benchmark index was also helped up by banking stock following Lloyds' third-quarter results. Barclays put on 11.75p to 239.25p despite revealing it is facing a £290m fine from US regulators over alleged electricity rigging.

BSkyB broadcast a share price advance of 50p to 759p after revealing it had signed up 48,000 new households, with 20,000 additions to its core pay-TV offering.

British luxury group Burberry saw its shares strut up ahead of its half-year results next week. It gained 49p to 1,215p.

There was better news for mid-cap gold digger Centamin. The Egyptian miner's shares fell 35 per cent on Tuesday when it emerged that a court ruling had voided its rights to operate its flagship Sukari mine. It has been mining gold at Sukari since 2009 in a region that has been mined since before the Pharaonic Era. But it said it will appeal against the ruling and its shares were reinstated after a suspension. They glistened up 3.27p to 67.1p.

Another day, another profit warning from Chemring. Shares in the defence equipment maker landed at the bottom of the mid-cap index, falling more than 16 per cent, and are at their lowest since 2006.

The stock has shed more than a fifth of its value in the past three months after profit warnings and uncertainty over talks with its potential suitor, United States private-equity player Carlyle. It cut its full-year profit guidance by more than a quarter after it was hit by delays to contracts and technical problems.

The explosive-device detectors and flares maker had been expected to report an average earnings per share of 43p for the year but yesterday it reduced this by 13p. It surprised the market last month with the news that chief executive David Price was being replaced by former John Wood Group executive Mark Papworth.

Analysts think the Carlyle interest is all but dead. Chemring's full-year results are due on 24 January and its shares nose-dived 53.1p to 260.6p.

Electrical retailer Dixons benefited from the imminent demise of rival Comet, and its shares sparked up 2.78p to 23.38p.

Previously troubled AIM-listed oil and gas exploration and production company Circle Oil said it has had some good news at a well in Tunisia. Analyst Keith Morris at Investec rates the shares a buy with a target of 80p.The shares edged up 0.62p to 18.88p.

AIM-listed tiddler Mirada, one of many companies offering "TV anywhere" media software, has moved into the black for the first time. The group, which counts Disney, Sky and MTV Networks as clients, saw its shares tick up 4p to 14.5p.