FTSE remains in the red despite oil sector bid activity

Rumours of takeover bids in the oil sector have done very little to lift the blue-chip index as a whole with the FTSE 100 trading relatively flat in the final session of the week. BG Group (LON:BG) is the one standout stock of the moment on talks that Royal Dutch Shell (LON:RDSA) is going to hatch one of the biggest takeover bids in UK corporate history as it looks to acquire its opposing stock.

Rumour has it; Royal Dutch Shell is on the verge of putting in a £54bn – £16 a share - takeover offer for BG Group, the oil and gas exploration group that was once part of British Gas, according to the Daily Mail.

Royal Dutch Shell hit headlines yesterday after Anne Pickard, Shell Australia’s Executive Vice President, said the company plans to spend £32bn in Australia over the next ten years to increase gas production.

Pickard’s words have rekindled talks of Royal Dutch Shell chasing BG Group which has always been at the top of the oil giant’s acquisition wish-list. The talks have sparked a wave of investor interest in BG Group stock, sending the share price 57p higher – an increase of more than 5.5 per cent.

Royal Dutch Shell hasn’t fared as well with the share price tumbling 0.7 per cent as shareholders fear the financial implications of a takeover of such proportion.

And that’s not the only bid activity in the oil sector. Midcap group Dana Petroleum (LON:DNX) is up 5.8 per cent after state-run Korean National Oil Corp made a hostile offer of approximately £1.8bn cash for the firm.

Also in the midst of bid talks is heavyweight miner Vedanta Resources (LON:VED) which is looking to buy the Indian arm of Cairn Energy (LON:CNE), as reported by shareprices.com earlier in the week.

The deal looks to be pushing on after India’s Oil Minister, Murli Deora, has requested details on the proposed acquisition worth over £6bn.

The continued reporting of the deal has seen Cairn Energy push over one per cent higher. Vedanta Resources has dropped 1.5 per cent of its share price, joining a number of mining competitors in the FTSE 100 fallers charts this morning.

Fears of declining demand from the east have hit mining stocks which rely heavily on export deals to the manufacturing capitals. Eurasian Natural Resources (LON:ENRC) heads the declines with losses to its share price in excess of four per cent. Kazakhmys (LON:KAZ) and Xstrata (LON:XTA) are also up there with losses of 2.5 per cent.

Also in heavy declines is oil giant BP (LON:BP) after the firm announced the final plug that would bring a close to the oil leaking into the Gulf of Mexico won’t be put in place until September – a month behind schedule. The share price is down 1.9 per cent.

And to cap off a fairly dismal morning for risk-asserted stocks, banks are continuing to struggle against global economy concerns and a shocking performance by US stocks in the previous session.

Royal Bank of Scotland (LON:RBS) heads the declines for the sector, down 1.5 per cent. Barclays (LON:BARC) is one per cent down and HSBC Holdings (LON:HSBA) and Lloyds Banking Group (LON:LLOY) are losing ground at the rate of 0.6 per cent.

Just after 11:00BST, the FTSE 100 is 0.5 per cent down with a loss of 27 points. The index currently sits at 5,184,35.

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