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Risk Warning
16/11/2010
Shares in Invensys (ISYS.L) fall 2.6 percent, retreating after a 9 percent jump by the engineer's stock in the previous session, with CFD specialists Prime Markets seeing "no fundamental backing" for the spike.
Invensys shares rose on Monday after its chief executive Ulf Henriksson said in a newspaper interview at the weekend that China Southern Rail had, in principle agreed to the possibility of acquiring Invensys.
Invensys, in a later statement, downplayed its CEO's comments and said it was not in offer talks, however the stock remained strong on Monday.
"For the Invensys CEO to openly discuss the possibility of a takeover or strategic stake only to have the matter emphatically denied in a statement to the Exchange on Monday is a strange state of affairs indeed," says Richard Curr, head of dealing at Prime Markets.
"The sharp spike in the share price has no fundamental backing, and as such we recommend selling the rumour down to the 50 day MA (moving average) level at 312 pence," he adds.
"However, as with all M&A/strategic manoeuvring the situation could change in a heartbeat, so a close stop loss must be employed."
Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily a guide to future performance. Trading in these markets is generally considered to be suitable only for the more experienced investor as it carries a high degree of risk. An investor may not receive back the amount of their original investment and in certain circumstances may be liable for a sum that is greater than their original investment. If in any doubt, please seek independent financial advice.