Kingfisher shares jump on bid talk

LONDON (Reuters) - Shares Kingfisher (KGF.L: Quote, Profile, Research) jumped as much as 10 percent in mid-morning trade on Monday, as traders cited market talk of private equity interest in Europe's biggest home improvements retailer.

Two traders said there was talk of a bid of around 195 pence, while others mentioned a bid of around 225p from a U.S. predator.

Kingfisher, which owns UK market leader B&Q and France's Castorama, declined to comment.

At 11:10 a.m. shares in Kingfisher were up 5.6 percent at 154.5 pence, down from a high of 160.9p, valuing the company at around 3.6 billion pounds.

The cost of insuring Kingfisher's debt also rose. Its five-year credit default swaps were 10 basis points wider at 310 basis points, a trader said.

That means it costs 310,000 euros per year to insure 10 million euros of the company's debt against default.

Analysts at Lehman Brothers released a note on Friday saying the company's French business, which accounts for around half of group profit, would not see the precipitous decline seen in the UK, and reiterated its 160p price target on the stock.

"While the travails of B&Q and the UK home-improvements market have preoccupied the market in recent years, Kingfisher has been diligently building a successful French operation," Lehman Brothers said in a note.

Home-improvement retailers have been battling a slowdown in consumer spending, with shoppers hit by higher bills and a weakening housing market.