Gilts

Gilts slumped as markets reacted badly to the Bank of England’s £3 billion bond buyback, in which it allocated more than three quarters of its funds to only one gilt and bought none of the benchmark March 2019 gilt. The September gilt future fell 71p to £117.37 and yields on the 2019 gilt rose by as much as 15 basis points as prices tumbled.

Rumour of the day

Forte Energy, the uranium explorer, fell 0.625p to 7½p amid profit-taking, despite reporting a reserve estimate at its project in Guinea, West Africa, comparable with commercial deposits in Namibia. It could increase the official estimate in a few weeks as new data arrive from samples. Areva, the French nuclear power giant, owns a 12.6 per cent stake.

Deal of the day

Paul Hampden Smith, finance director of Travis Perkins, and his wife bought a total of 10,600 shares in the builders’ merchant at 522p and 539p. Travis’s shares, up 3.7p at 545p, have recovered since March, helped by the belief that the housing market has reached its bottom and by the company’s May share issue, which provided a financial cushion.

Bet of the day

Have BP and CNPC, its Chinese partner, made an error in agreeing to receive a fee of only $2 for every barrel of oil they extract from the Rumaila field in Iraq? BP was the only big oil company to accept the terms, perhaps on the hope that it would prove a valuable foot in the door. ShortsandLongs.com offers a rolling spread of 486.9p-487.9p.

Tiddler to watch

Afren rose 5¼p to 58¼p after Credit Suisse, which owns a stake, and Merrill Lynch, its broker, raised their price targets to 80p when the company told analysts and investors that it expected oil to flow from its field off Ghana in the first half of next year. That should generate enough cash to finance further drilling costs.

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