Shell 'ready to increase £1.9bn Arrow Energy bid'

Shell was expected to raise its joint $3 billion (£1.9 billion) bid for Arrow Energy after the Australian gas explorer asked for its shares to be suspended.

Analysts said the halt in trading could be due to the fact that Shell has re-entered talks with its target.

Shell launched a takeover bid for Arrow in a joint strike with PetroChina in what would be a rare Chinese investment in an Australian company.

It is thought that the deal largely hangs on whether the bidders will increase the cash portion of the deal and sweeten the overall value.

Speaking of the shares suspension, one analyst said: "I read it as the negotiations will lead to a possible higher bid."

The current offer is for A$4.45 (£2.70) a share in cash plus a share in the combined international business.

"That appears too low," said Credit Suisse analyst Andrew Williams, who felt A$5.50 was a more realistic valuation.

Shell and PetroChina also need to push for regulatory clearance amid troubled relations between Australia and China over the Rio Tinto affair. Rio staff will on Monday go on trial in China over spying charges.