Saturday, September 30, 2006

PARTYGAMING experienced a late flurry of buying on an apparent procedural
setback in Congress over America's anti-gambling legislation.
Bill Frist, the Senate majority leader, has been seeking to attach the
anti-gambling measure to one of two "must-pass" Bills before Congress shuts
down this weekend ahead of November's mid-term elections. But with
legislators keen not to hold up the progress of the politically sensitive
Homeland Security Bill, it was set to be pushed through yesterday without
the gambling curbs attached. Separately, there was no sign that efforts to
attach the anti-gambling measure to the Defence Bill - which itself appears
unlikely to get through Congress before tomorrow's deadline - were making
any progress. Followers of the online gambing sector suggested that the
chances of the controversial legislation being passed this session had
virtually evaporated. Further, although it may get a fresh airing in the
so-called "lame duck" session - the period in which Congress still meets
after elections have been held, but before the newly elected Congress has
convened - there is also now the possibility that the legislative process
will have to be restarted next year, effectively meaning a six- month delay.

With short-term investors taking heart from the impasse on Capitol Hill,
PartyGaming rose 4¼p at 105¾p. The FTSE 100 gained 41.2 to5,971.3, with
natural resources stocks again making much of the running. Aside from
further gains in metals prices, miners were helped by a heavyweight circular
from ABN Amro, which believes that this month's sell-off in the sector
offers a good buying opportunity. The Dutch broker says valuations appear
low relative to what is priced into other cyclical stocks.

Brambles jumped 20p to 488p as takeover talk refused to fade. One theory was
that the pallet maker could be a target for General Electric at around 600p
per share. A competing theory out of Australia overnight was that a private
equity house is mulling a move at A$15 (598p).

A more pedestrian explanation is that the gains owe more to arbitrage
activity ahead of Brambles' move of its primary listing to Australia in
December. Under that scenario, proprietary traders who have been trying to
profit from a valuation disparity between the two listings have been
recently covering their short positions in the Australian stock, thereby
triggering a squeeze.

Elsewere, bid rumours continued to follow Hanson, up 25p at 746p, which
yesterday hosted an analysts' visit to its operations bordering the Thames
Estuary. Speculative investors also continued to pursue Prudential, which
rose 6½p at 643½p, on persistently strong talk of an imminent 750p a share
offer.