Update filed at 0910 hrs

Old Mutual gathered pace in early trading this morning on news that it has entered into exclusive talks with HSBC over its stake in Nedbank.

The South African-based bank is currently valued at £6.23 billion (ZAR 70.8 billion) with Old Mutual’s stake accounting for 55 per cent of that.

The insurer is currently undergoing a restructuring programme which would see the business refocused on its core activities to reduce its borrowings after last summer’s profits warning. If market tattle is to be believed HSBC could offer a significant additional sum as part of the deal.

This could mean an offer of up to £4.5 billion for the Old Mutual-owned share. The market responded positively, with the share price lifting 4.6 per cent at 126.5 pence.

Petrofac, meanwhile, charged into second place on the FTSE 100 gains list, rising 3.2 per cent to 1,405 pence after the company declared pre tax profits of £206.2 million (US $321.3 million) for the six months to 30 June 2010, up from £133.1 million (US $207.5 million) in 2009.

Lingering M&A talk in relation to Aviva was enough to keep the insurer in the top three gains. Aviva rose 2.3 per cent to 386.4 pence.

There were limited fallers on the index, with Aggreko the worst affected, down 1.1 per cent at 1,491 pence as was BG Group, down 1.1 per cent at 1,080 pence.

Pearson Group – the publisher of the Financial Times, dropped 0.9 per cent to 942 pence.