Traders spent the Friday session discussing deals they expected to emerge next week among second-line stocks, namely a merger of housebuilders George Wimpey and Taylor Woodrow.
There was a late surge in George Wimpey, up 15p at 482.5p on talk that it is poised to announce a merger with Taylor Woodrow, which rose 6p to 390p. Following the £643m takeover of Westbury by Persimmon the sector has been buzzing with takeover talk. Wimpey and Taylor Woodrow have US operations and traders reckon significant cost savings could be made by knocking them together. Wimpey has underperformed the building sector and is ripe for a takeover.
Among the blue chips, the FTSE 100 closed 24.1 points lower at 5711 exactly. With little corporate news among leading shares it was down to analysts to move stocks with a slew of notes.
Vodafone eased 1.25p to 127.5p as the investment bank Bear Stearns downgraded its stance on the mobile phone company to underperform from what it terms "peer perform" - doing as well as everybody else in the sector - citing possible further regulatory pressure in some of its markets.
ITV was also marked lower, down 2.25p at 112.75p, as JP Morgan downgraded the broadcaster's stock to neutral and dropped its price target to 115p from 150p commenting that the group's acquisition of website Friends Reunited was "an expensive shift into uncharted territory".
Elsewhere among media stocks, Reed Elsevier eased 11.5p to 535.5p as Goldman Sachs released its 2006 themes and stock tips for the sector. The broker has downgraded its stance on the publisher to underperform from in line as it expects incoming cash to be used for acquisitions. It also highlighted potential problems in the educational publishing unit.
Shire Pharmaceuticals lost 34p to 816.5p after Thursday's run on the hopes of a settlement in the US courts of its patent dispute over hyperactivity drug Adderall. Traders blamed the reduction on a note from Merrill Lynch; the broker moved its stance on the drugs group to neutral from buy, on valuation grounds.
Mining stocks again attracted positive broker comment as Cazenove and Deutsche Bank joined the list of investment banks that are bullish on miners. Cazenove admitted that the sector is no longer exactly cheap but it retained its overweight stance, while Deutsche Bank told clients that the current commodity price cycle may be longer and reach higher levels than originally expected. Xstrata added 2p to 1442p with Vedanta Resources up 16p at 914p.
Among the second-liners, the FTSE 250 closed down 17.4 points at 8921.5 points with the Small Cap index up 2 points at 3410.
Computer game developer and owner of Eidos, SCI Entertainment, dropped 22.5p to 510.5p on talk that former Scoot boss Robert Bonnier had dumped his position in the stock - obtained through contracts for difference. The move, apparently in reaction to a margin call on the stock, also raised doubts about a concrete offer ever emerging for the company.
Gondola Holdings was the biggest riser in the FTSE 250, up 18p at 381p, its highest since floating at 320p in November, after the restaurant owner said its annual results would hit forecasts thanks to a strong Christmas.
The company, which owns PizzaExpress, ASK and Zizzi, said like-for-like sales rose 5.2% over the eight weeks to January 8.
HMV eased 15.5p to 163p after Citigroup reduced its target price on the music retailer to 180p from 220p while 3D mobile phone gaming group Superscape plunged 7p to 16.25p, a drop of 30%, after admitting fourth-quarter revenues would be below expectations. The company had a dire November with lower than expected revenues from mobile operators in Europe and the US.
Down on Aim, shares in Interactive Prospect Targeting, the online direct marketing company, added 5.5p to 148p following its positive trading this week, while shares in Univision Engineering eased 0.12p to 4p after the Hong Kong-based CCTV equipment firm announced the placing of more than 10m shares at 3p to bolster its working capital.
Ultimate Leisure sank 6p to 245p after the pubs and clubs business admitted Christmas was anything but festive, while shares in Gold Oil lurched 1.5p higher to 4.375p after the oil exploration group, which is concentrating on the Caribbean and South America, announced it had won the rights to carry out seismic, drilling and development operations in northwest Peru.
Imperial Energy Corp added 57.5p to 567.5p after announcing that it had found a new reservoir in part of its Siberian acreage.
Finally, shares in professional services group Tenon added 5.5p to 30p on news that it had appointed Numis to examine its strategic options after receiving a buyout offer from the management, who are worried that the share price - which was sent downwards by a profit warning in November - would reduce "the level of rewards available to client service directors in comparison with alternative operating structures".
Pipex dream
Shares in internet service provider turned home telephony specialist Pipex Communications rose 0.94p to 13.15p yesterday after saying trading last year met expectations. Broadband subscribers jumped almost 50% to 283,000 which Investec Securities said was a particularly strong performance. More than 40% of the new broadband subscribers also took Pipex's telephone service. While chairman Peter Dubens refused to comment on rumours BSkyB is interested after the satellite firm bought Easynet, there is no doubt it is a tasty morsel. It is one of only two UK firms with licences for fixed wireless broadband and is testing broadband over Wimax, a new wireless technology, in commercial trials over the next few months. Later in the year it will try TV over wireless broadband.