Market report: Traders’ Imagination sparked by talk of China-backed takeover

On a day when trading screens flashed red, buyers were in need of inspiration — and they found it in Imagination Technologies.

Shares in the company were up 8p, or 6%, to 146.25p after weekend reports that a private-equity fund backed by the Chinese government is circling the troubled chipmaker.

The company put itself up for sale last month, in the wake of news that Apple, its largest client, was to stop licensing Imagination’s graphics processors for its iPhones and iPads.

The decision caused Imagination to lose almost two-thirds of its market value in a day.

Canyon Bridge Capital Partners, which is based in Silicon Valley but backed by Beijing, has held early-stage talks about a potential bid, the Sunday Telegraph reported.

Last year, Canyon Bridge agreed to pay £1 billion for US firm Lattice Semiconductors, although the deal has come been opposed by US regulators.

Imagination was a rare riser at the start of the week as the IMF’s downgrades for growth in the UK and US economies filtered through to the markets.

The gloomier outlook cast a shadow over trading today and investors responded by sending the FTSE 100 down 50.02 points, or 0.7%, at 7402.89.

Companies earning their money outside the UK and US were immune from the sell-off. Those included Asia-focused banks HSBC, up 1.8p at 736.9p, and Standard Chartered, 2.1p stronger at 815.8p.

On the next rung down, Ascential, the owner of the Cannes Lions advertising festival, rose 10p to 346.4p after its first-half results beat analysts’ forecasts.

Carillion, which has yo-yoed over the past fortnight, had an unusually steady day on the market, up 0.35p at 60.3p, after broker Canaccord slashed its target price to just 20p, on the basis that either net debt swells by £200 million or it will be forced into a painful six-for-one rights issue for £500 million.

Pressure mounted on Acacia Mining, which slumped a further 35.34p, or 14%, to 212.1p amid calls to address alleged human rights violations at its North Mara gold mine in Tanzania.