Afferro jumped 10¼ or 10pc to 101¼p as it emerged the auction for the West Africa-focused iron ore mining company is heating up.
In a statement, Afferro confirmed it had received a takeover approach from Aim-listed International Mining and Infrastructure Corporation (IMIC), which dipped ¾ to 28¼p.
The approach from IMIC values each Afferro share at between 115p and 140p. Any offer is likely to be made using cash and new IMIC stock as it is significantly smaller than Afferro.
However, IMIC faces stiff competition for Afferro, which said that it continues to have discussions with other interested parties regarding a possible offer and is currently under "exclusivity obligations" with one party. The exclusive discussions preclude Afferro from engaging in discussions with IMIC until January 13.
It is not clear which party is in exclusive discussions with Afferro but it is thought not to be Jindal Steel and Power, one potential acquirer. Traders believe, however, that the bidder currently in exclusive discussions with Afferro is likely to be a "major" mining company willing to pay 150p a share.
Overall, it was another quiet day in the London market with volume less than 15pc of the 90-day daily average, according to Reuters.
The FTSE 100 dropped 27.56 points almost 0.5pc to 5897.81 following renewed "fiscal cliff" jitters that US politicians may fail to secure an agreement on a new federal budget. But the FTSE 250 (FTSE: ^FTMC - news) bucked the weak market trend, climbing 15.24 points to 12374.97.
Some mining stocks were in demand after it emerged China's manufacturing industry unexpectedly expanded in December at the fastest pace in 19 months, boosting optimism that a recovery in the world's second-biggest economy is gaining traction. According to Bloomberg, the final reading of a Purchasing Managers' Index was 51.5 in December. Kazakhmys (LSE: KAZ.L - news) perked up 1 to 778p while Evraz in which Chelsea FC-owner Roman Abramovich has a large stake rose 2 to 258.9p. Elsewhere, New World Resources , an Eastern European coal producer, topped the FTSE 250 index, advancing 21.3 6.7pc to 337.3p.
On a less positive tack, Marks and Spencer (LSE: MKS.L - news) dipped 3.4 to 382p after Andy Clarke, chief executive of rival Asda, was reported as saying he expects 2013 to be "challenging". The negative sentiment also appeared to weigh on Premier Foods (LSE: PFD.L - news) , owner of Hovis bread and Bisto gravy brands. Premier (BSE: PREMIER.BO - news) 's shares dropped 9¼ to 113p.
Turnaround engineering company Melrose was one of the worst performing larger companies, sliding 8.2 to 223½p. Banks had a mixed day: Barclays rose 0.7 to 262.4p but Lloyds Banking Group (LSE: LLOY.L - news) fell ¾ to 47.9p.