Punch perks up as Morgan Stanley increases stake

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Punch Taverns (LSE: PUB.L - news) provided those dealers that made it into work with some excitement on another day when trading volumes were extremely low.

Punch flirted with a six-month high of 8p during intra-day trading following news Morgan Stanley (Xetra: 885836 - news) now owns almost 12pc of the pub company.

Morgan Stanley's stakebuilding comes as the business carries out a restructuring of its bonds that may lead to a turnaround of the business.

Punch shares eventually gave up some of its morning gains but still managed to close up 0.2 at 7.6p.

Other small cap stocks to stand out included Chinese oil drilling company Greka Drilling .

The shares leapt 1.1 almost 13pc to 10p on news Greka has won a contract with China National Petroleum Corporation's Huabei to provide drilling services. The initial contract is expected to be completed early in the first quarter of 2013.

Elsewhere, oil explorer TXO (formerly Texas Oil (Berlin: T0M.BE - news) & Gas) jumped 0.05 - almost 22pc to 0.28p amid hopes of positive news in the New Year on its Tasmanian gas investment.

Overall, the FTSE 100 (FTSE: ^FTSE - news) index lost 28.93 points to 5925.37 while the FTSE 250 retreated 37.95 points to 12359.73 amid fresh concerns US politicians will fail to reach on a federal budget.

"The market doesn't like the uncertainty but I think there will be some form of resolution in due course," said Paul Mumford, a fund manager at Cavendish Asset Management.

Trading volumes were extremely light, with just under 140m shares changing hands during the session.

Insurance stocks dominated the loserboard as dealers looked to trim their holdings in riskier shares.

Motor insurer Admiral (LSE: ADM.L - news) took the wooden spoon, sliding 22p to £11.76, while life insurance giant Prudential (LSE: PRU.L - news) lost 12 to 865p. Aviva also fell 5 to 373¾p.

International Consolidated Airlines Group , owner of British Airways and Iberia, dipped 22p to 311.94 as the price of oil headed for the biggest weekly gain since August, according to Bloomberg. Michael Poulsen, an analyst at Global Risk Management Ltd, told Bloomberg that "[Oil] prices could jump [further] if US politicians strike a deal on avoiding the fiscal cliff".

Publishing giant Reed Elsevier (LSE: REL.L - news) dipped 4 to 638½p. Yesterday, the company announced a £100m share buyback programme.