The action yesterday was down among the second line stocks, with bid fever gripping traders. Shares in Woolworths flew off the shelves as talk that the high street retailer is about to be approached raced round the City's dealing rooms.
There has been heavy trading in Woolworths shares across the last four trading sessions with market experts estimating that almost a third of the company's shares have changed hands.
One half of the market seems to believe the story that WH Smith is preparing a bid at up to 50p a share for the company, much loved of retail punters, while the other half believes Icelandic investor Baugur is ready to return. WH Smith gained 10.75p to 408.75p while Woolworths closed up 2p at 34.5p.
Were the Icelanders to launch an attack on Woolworths, dealers reckon they would be forced to offload some of their other UK stocks in order to provide some upfront cash. The most likely target, some reckon, is Baugur's near 14% stake in French Connection. Shares in the fashion chain closed down 7.75p at 260.25p.
Elsewhere among the second-line bid stories, shares in Matalan were the second biggest riser in the FTSE 250 - up 7.5p to 180.5p - on talk that the discount clothing chain's chairman and major shareholder, John Hargreaves, is about to back a buyout at 250p a share.
Matalan's advisers have been offering shareholders the chance to meet Mr Hargreaves and deputy chairman Geoff Brady to discuss the business's prospects following the departure last month of chief executive John King.
The company has experienced a senior management bloodbath with three chief executives forced out over the past five years. While Matalan's advisers have been at pains to say that Mr King's departure was not due to a clash with Mr Hargreaves, retail industry insiders do not believe them.
Despite all this excitement, the FTSE 250 index closed down 44.2 points at 9243.5.
Back among the blue chips, the FTSE 100 closed down 25.6 points at 5746.8 as declines in BP, down 18p at 647.5p following its poor fourth-quarter results, weighed heavily on the market. Elsewhere among the oil stocks, Cairn Energy dropped 72p to £18.32, further depressed by Monday's negative comments from Merrill Lynch.
Tesco jumped 4p to 329.5p on persistent rumours that it is preparing a bid for Dutch grocer Ahold with private equity group Kohlberg Kravis Roberts. Weaker than expected annual figures from fund manager Amvescap were overshadowed by a well received restructuring plan and its shares gained 27p to 534.5p, while BT closed up 6.25p at 213.5p ahead of its third-quarter results tomorrow.
Down among the small caps, shares in Dicom gained 18.5p to 241p after the information software group predicted its full-year operating profit will be higher than last time around despite interim profits being down on the previous year. The company points to a strong performance in the second quarter of the year.
In November Dicom admitted that it had sunk into a loss over the first three months of the year owing to a much weaker than expected performance. But yesterday the company said the second quarter saw much stronger trading and as a result chief executive Arnold von Buren, who is stepping down at the end of the month, was able to say: "The board believes that Dicom is now back on track for future growth."
Half-year profits showed the impact of that loss-making first quarter at £4.6m, down from £7.5m at the same point in the previous year.
Shares in recruitment and training group Quantica added 1.75p to 62.5p after the company reported a 30% rise in annual profits, while Sanctuary Group gained 1.23p to 1.9p as short-sellers were forced to cover their positions following the company's refinancing last week.
On Aim, shares in Ultimate Leisure eased 1p to 265p as recent stake building by property entrepreneurs David and Simon Reuben came to an end with the news they have picked up a further 1.25m shares to take their stake to 29.96% of the business - as high as they can go without making a full offer. The Reuben brothers' acquisitive run has been supporting the stock but they are not believed to be interested in taking the company private. As a result, their support has run its course and until the next rumour about Ultimate starts circulating - and there certainly will be more - traders said the stock will tread water.
Angel Biotechnology Holdings added 0.1p to 1.55p after the biopharmaceutical contract manufacturer unveiled a new contract with stem cell therapeutics expert ReNeuron Group, flat at 22p.
Z Group added 2.5p to 121.5p after signing a deal with internet service provider Pipex, up 0.05p at 14p. Shares in 32Red, the online gaming business that floated last September, gained 6p to 159.5p as it moved its annual results forward. Dealers reckon trading has been very strong.
Finally, Aim played host to a new issue in the shape of China Goldmines, created to develop a gold mining project in China's Hunan province. The company has raised £4.5m through a placing at 60p. The shares ended their first day at 73p.
Game over
Shares in Aim-listed cash shell Warthog lost 0.02p to 0.215p as Gizmondo, the UK's supposed rival to Nintendo and Sony, called in the liquidators after attempts to raise a new line of credit to allow the business to trade itself out of administration fell through. Joint liquidators David Rubin & Partners and Begbies Traynor have laid off all staff, according to a filing from Tiger Telematics, and are looking at a sale of assets such as its intellectual property. Tiger Telematics, the company's US-listed parent, added that it might also go bust. Warthog owns almost half a million shares in Tiger Telematics. Gizmondo launched its handheld gaming device 10 months ago with the sort of fanfare not seen since the dotcom era.