International Ferro Metals provided one of the London market's few speculative features on Thursday.

The ferrochrome producer spiked more than 20 per cent in afternoon trading as takeover rumours circulated.

With Ferro shares down sharply since May, the theory went that its largest shareholder, Chinese company Jiuquan Iron and Steel, may make an opportunistic bid for the rest.

Traders were sceptical of the talk, seeing positive comment from Numis Securities a more likely explanation for the demand.

Following a visit to Ferro's South African mine, Numis analyst Simon Toyne told clients that a new management team should help stabilise production over the next year. He also saw the stock as "substantially undervalued" after its recent sell-off.

Ferro closed up 11.7 per cent to 79p as about three times the average daily volume changed hands.

That move matched the trend in the wider market, where commodity producers were helped by a rising oil price and weaker dollar.

ENRCtook on 3.4 per cent to £10.62 after its interim profit beat forecasts. Shareholder Kazakhmyswas up 5.1 per cent to £13.24.

Tullow Oil continued its recent strong run ahead of first-half earnings next week and as UK gas prices hit record levels for a second day. Tullow shares were up 7.8 per cent to 799½p, while North Sea peer Dana Petroleumadded 6.3 per cent to £14.57.

Oil services companies were also well bid ahead of results next week from Petrofac, up 4.6 per cent to 589p, and Wood Group, 5.7 per cent better at 437¾p.

But weakness among the financial stocks pulled the wider market flat, with the FTSE 100 ending 1.6 points lower at 5370.2.

Insurance group Aviva was the sharpest faller, down 4.5 per cent to 477p.

Housebuilders rallied on short covering after Persimmonkicked off results season with figures that were no worse than the bears feared. Management is targeting a cut in borrowings by half next year.

"If these debt targets are met, the group's debt covenants will not be tested and it will be a strong survivor of the UK housing battleground. It will be well placed to take market share into the housing market recovery," said Cazenove.

Persimmon - which was third on the list of most-shorted FTSE 350 companies - rose 9.6 per cent to 327p. Nearly 29 per cent of its stock was out on loan, according to Data Explorers.

Barratt Developments jumped 13.8 per cent to 128¼p and Bellway added 7.6 per cent to 566p.

Imperial Energy was up 5.4 per cent to £12.08 on reports that ONGC, India's state-run oil group, had gained government approval to bid and had submitted a non-binding offer of £12.90 a share.

Videsh, ONGC's investment arm, is said to have put a £15-per-share ceiling on its valuation if Chinese rival Sinopec chooses to counterbid. Meanwhile, bankers are rumoured to have sounded out leading Imperial shareholders about providing irrevocable undertakings on ONGC's offer, without much success.

"Risk of the deal failing has dropped considerably in our view," said Andrey Gromadin, an analyst at JPMorgan. "We believe intensifying media coverage, reports of state-level negotiations, and ONGC's readiness to face competition suggest a strong possibility of a positive outcome."

Associated British Foodslost 2.4 per cent to 764p after Citigroup kept a "sell" rating on the stock.

Laird Group was higher by 3.4 per cent to 346½p after Goldman Sachs said the electronic components maker looked the capital goods sector's most likely takeover target. Serviced office provider Regusdrifted 0.4 per cent to 68¾p after Servcorp, a peer with exposure to Japan and the Middle East, beat earnings expectations but guided for just 5 per cent net profit growth for its year to June.

Analysts currently forecast Regus, which posts interims next week, to grow earnings between 6-20 per cent in 2009. UBS said this looks too optimistic.

"Regus generates over 85 per cent of earnings from the weakening economies of North America, Europe and the UK, compared to Servcorp which is exposed to more attractive geographical markets," it said.