London shares rally in early deals on Wednesday, bouncing having initially slipped modestly lower, as traders go cautiously on the hunt for value buys after yesterday's hefty sell-off. Wall Street was lower overnight, while Asia is mixed this morning. Europe is modestly higher.

The FTSE 100 index is up around 65 points, or 1.15%, at 5,698.

In corporate news, microchips designs company ARM (ARM) posts a strong set of full year results and says it remains confident of meeting forecasts for 2016 as demand for its microchip technology continues to grow. Despite the profit warning from smaller peer Imagination Technologies (IMG) earlier this week, ARM's fourth quarter saw a 19% increase in revenue to £269.1 million, beating consensus forecasts, and helping to lift profits 17% to £138.7 million. Yet the shares fade around 2.5% to 913.5p, their lowest since last August, as investors remain concerned over recent cautious smartphone growth comments from major customer Apple (AAPL:NDQ), which you can read about here.

Oil company Tullow Oil (TLW) slips 4.2% to 154.65p as it enters into talks with banks over its debt facilities. Stockbroker Davy says there is a possibility that movement in oil prices will reduce the capacity of one facility which has $3.7 billion of credit. ‘However, with liquidity of $1.9bn at end-2015, any reduction should not have a meaningful impact on financing the group’s activities,’ it adds.

Film studio group Pinewood (PWS:AIM) jumps 18.4% to 532.25p after saying it may put the business up for sale. Read our news analysis for more details.

A mooted management buyout of media group Tangent Communications (TNG:AIM) sends its shares up 63.6% to 2.25p. Although the cash takeover approach is priced at a handsome premium to last night’s share price, it is still way below the price at which the company was trading only a few months ago.

Model railway and Scalextric owner Hornby (HRN:AIM) slumps 34.6% to 53p after warning its full year loss will be be substantially wider than expected due to a disappointing response to January product promotions and poor underlying sales. It expects to report a loss before tax of between £5.5 million and £6 million and says there's a risk of it breaching a covenant of its banking facility.

Packaging company Smurfit Kappa (SKG) surges 4.5% to €19.12 on a 58% rise in pre-tax profit to €599 million in 2015 with pre-exceptional earnings per share up 21% to 197.3c, driven by its acquisition of seven businesses, a generally good trading environment and lower finance costs. In Europe underlying corrugated volumes grew by 3% rfeflecting good levels of demand across most countries and market segments. The board has proposed a 20% increase in the final dividend to 48c per share.

Video games producer Frontier Developments (FDEV:AIM) tumbles 4.6% to 207.5p after reporting an adjusted operating loss of £1.7 million in the six months to 30 November, 20% worse than the previous year. If R&D costs aren't expensed, the group made an operating profit of £0.4 million. Revenue is up 50% to £10.9 million driven by the sale of 1.2 million units of its Elite Dangerous space game, which rose to 1.4 million sales at the end of December.

Homewares market leader Dunelm (DNLM) rebounds 7.1% to 883.5p as interim results beat expectations, with taxable profits 10.7% ahead at £75.5 million and free cash flow increased by a bumper 66.4% to £76.7 million. The bedding, curtains and cushions seller also announces another special dividend of 31.5p (£64 million), on top of a 9.1% hike in the half-time payout to 6p.

Diversified food group Real Good Food (RGD:AIM) softens 2.4% to 40p despite announcing the £1.75 million acquisition of frozen desserts maker Chantilly Patisserie, a deal opening up the growing food service sector for Pieter Totte's small cap charge.

Life insurer Prudential (PRU) stages a comeback as financials find favour in today’s market rebound. Emerging markets-focused Prudential’s shares are down 23% year-to-date and its shares were suspended early in February after reports China’s government was planning to cap the price of insurance policies provided by foreign companies. Shares in Prudential trade 5.3% higher at £11.85.

Home builders are also back in fashion after a sell-off earlier in the week as hedge funds declared short positions in market leader Berkeley (BKY). Redrow (RDW) is up 7.1% at 433p and Bovis Homes (BVS) gaining 5.3% to 879p.

Issue Date: 10 Feb 2016