By Sarah Turner
LONDON (Dow Jones)--Supermarket shares climbed in London on Thursday, with bid speculation sending J. Sainsbury shares soaring in the top index, although the broader market closed with mild losses.
J. Sainsbury shares closed the day up 10.1% at 342p, after reaching an intra-day high of 373 pence.
The gains came after reports that the Qatari sovereign wealth fund is interested in increasing its 26% stake in the firm. The fund built up the stake when it tried to take over the firm in 2007.
Speculation in the market suggested that a 420 pence-per-share bid has been accepted by the Sainsbury family, Dow Jones Newswires reported.
Sky News reported that there hasn't been a formal bid from Qatar but an approach could have come from somewhere else.
A Sainsbury spokesperson said: "We don't comment on rumor and speculation."
Other supermarket groups that advanced on Thursday included Tesco , up 1.7% and William Morrison , up 1.8%.
Overall, the U.K. FTSE 100 index closed the day down 0.6% at 5,222.95.
Other European shares ended on a mixed note while U.S. stocks slipped slightly in morning trading after results from Goldman Sachs and Citigroup.
U.S. earnings fueled positive sentiment towards shares on Wednesday when the British market closed with a 2% gain to hit a level not seen since Sep. 19, 2008.
However shares retreated on Thursday with miners lower as metals futures pulled back and bid speculation faded for some firms.
Shares of Anglo American dropped 4.1% after rival Xstrata said that it has no intention of making an offer for Anglo American.
Anglo American rejected a preliminary approach from Xstrata in June, and earlier this month the U.K. takeover authorities set an Oct. 20 deadline for Xstrata to make an offer or walk away.
Xstrata Chief Executive Mick Davis said Thursday that the rationale for a merger is undiminished, but the decision to walk away "reflects our disciplined approach to growth." He added that Xstrata is looking at a range of alternative growth options. Xstrata shares fell 2%.
Oil and gas producers were also weak, with Royal Dutch Shell (RDSA) down 1.5%.
Shares of engineering firm GKN declined 6%.
The firm said that third-quarter group management sales fell 3% to 1.1 billion pounds from the same period a year ago. It also reported third-quarter profit before tax of 36 million pounds, unchanged from the year-earlier period.
The company, which serves the automotive, aerospace and off-highway markets, said that "considerable uncertainty" remains in a number of its end markets, and group sales in the fourth quarter are currently expected to be similar to those of the third quarter.
"We would caution that the shares have performed very well in the recent recovery and at 14.3 times December 2010 earnings are discounting a rapid recovery. Given the potential for a significant impact in the automotive division from the removal of scrappage schemes, we believe this is too high a rating and would encourage investors to sell," said analysts at Killik & Co.
Punch Taverns extended steep losses from the previous session with another 6.9% drop. On Wednesday, the firm reported a wider annual net loss after taking write-downs related to the value of its pubs.
Services Desk; Dow Jones Newswires; +44-20-7842-9319/9274