STOCKS NEWS EUROPE-Mouchel rises; bid saga "set to run"

Shares in Mouchel (MCHL.L) gain 6.5 percent, rallying after falling 11.9 percent late in the previous session as investors assess hopes for a takeover of the infrastructure services firm following a session of twists on Monday.

Mid cap peer VT Group's VTG.L raised its hostile takeover approach for Mouchel early on Monday, only for VT itself to fall victim later in the day to an indicative 1.14 billion pound bid approach from Babcock (BAB.L).

"We see this as an opportunistic approach from Babcock and believe it would have to offer significantly more than this to be successful," says Panmure Gordon in a note.

Evolution Securities says: "For VT shareholders, the choice is Mouchel as the step forward or participation in an enlarged Babcock model with a combined order book of over 10 billion pounds ... This is set to run for a while".

KBC Peel Hunt says "a tie-up between VT and Babcock is likely" and as a consequence, it sees near-term weakness in Mouchel's shares as technical positions are unwound.

VT Group shares extended Monday's advance, up 1.3 percent, while Babcock shares also gained 1.3 percent.

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