Rumours of stake-building had the speculators piling back into J Sainsbury.

The supermarket climbed 8½p to 559½p on volume exceeding 30 million, more than three times the average. Demand came amid rumours of renewed interest from both Robert Tchenguiz and Delta Two, the Qatari-backed investment fund that is its biggest shareholder.

Delta Two, run by Paul Taylor, a former business partner of Mr Tchenguiz, was said to have been approaching institutional holders offering up to 610p a share. Meanwhile, a counter-rumour had Mr Tchenguiz using recent weakness to lift his 5 per cent holding.

City sources were sceptical of the talk. While Delta Two may have sounded out funds about acquiring stock off-market, there was no indication that it has been successful in boosting its 17.4 per cent stake, they said. They also doubted the theory that Mr Tchenguiz had been trading, putting today’s stronger than normal volumes down to interest from hedge funds ahead of Sainsbury’s first-quarter results next week.

The wider market shook off global interest rate concerns to edge higher, with the FTSE 100 index closing up 39.2 at 6,559.6, only its second gain of the month. That came despite stocks including Johnson Matthey, down 37p to £16.58, and Cable & Wireless, down 1.7p at 199.8p, trading without rights to their most recent dividends.

Mining stocks were the main support after management at Antofagasta, up 28p to 594½p, used its annual meeting to make positive noises about the long-term outlook for copper prices. BHP Billiton rose 34p to £13.25 and Rio Tinto was up 161p to £37.21, helped by “buy” advice from ABN Amro.

Xstrata rose 138p to £30.07 as talk continued that the miner was set to rein in its takeover ambitions. Citigroup, raising its price target to £35, said Xstrata’s organic growth potential was being undervalued and the shares could benefit as management firms raise the project pipeline over the next few months.

Royal & SunAlliance was up 3.9p at 154.3p amid a revival of talk that the insurer could be a takeover target for AIG, its American peer. Such talk has been a common feature since R&SA completed the disposal of its US operation in March, ending its exposure to asbestos-related claims.

Elsewhere in the sector, Resolution climbed 8p to 631p after analysts at JPMorgan said the closed-fund insurance specialist has run out of potential deals and should be taken private.

“We believe the time has come for management to reconsider the direction of the group,” the broker said, noting that more than 12 months had passed since its last major deal.

“If the business were taken private and releveraged, Resolution could be worth 670p.”

Kelda was among the underperformers after Collins Stewart highlighted upcoming reports from Ofwat and the Competition Commission which could have a negative impact on the sector. It said the company, the owner of Yorkshire Water, which was down 13½p at 948½p, was overvalued by about 12 per cent.

Among the other broker calls to attract attention, Morgan Stanley started coverage of Experian with an “overweight” stance and 732p price target, lifting the credit checking agency by 14p to 616p. A leveraged buy-out cannot be ruled out after four takeovers in the industry so far this year, it said in a note, calculating a potential takeout price of 842p.

ARM Holdings led the mid-cap risers on a gain of 6¼p to 140¾p after JPMorgan’s team predicted that a rising appetite for high-end mobile phone handsets would help the semi-conductor maker. Moving to an “overweight” stance, it said that royalty revenues are poised to accelerate thanks to demand for high-specification handsets such as Apple’s iPhone. New York: Wall Street shares rebounded as bond yields eased and economic data came in stronger than expected. The Dow Jones industrial average experienced its biggest gain in points since July 19, 2006, closing up 187.30 points at 13,482.30.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts