Satellite broadcaster BSkyB had a bumpy ride yesterday after suggestions it may be one of the companies prepared to offer £600m for the UK internet business of AOL, which has been put up for sale by its parent company Time Warner.
The deal would make sense for Sky since it is keen to expand in broadband after its purchase of Easynet last year, and plans to unveil its own cut price service shortly. But yesterday its shares lost 10.5p to 561.5p. Cazenove said investors may be hoping for the company to return some cash, and any acquisition of AOL would limit the scope for any payback. But the broker is still positive on the company and has an outperform recommendation on the shares.
Overall it was another tricky day for leading shares, ahead of key inflation figures due today in the UK and tomorrow in the US.
Lehman Brothers issued an upbeat note on the markets, suggesting that the current slump may be nearing an end. It pointed to high turnover in the derivatives markets, suggesting that investors were squaring their positions, leaving the underlying strength that Lehman says is supporting the market to reassert itself. The broker reckons European markets look cheap based on current forecasts for company earnings this year, with dividend payouts well covered by cash flow.
That may be so, but it did not have much of a calming effect yesterday. By the close the FTSE 100 was down 34.3 points at 5620.9, although admittedly volume was fairly weak with 2.27bn shares changing hands. At least the leading index did not close - just - below 5620, which analysts have identified as a key support level. After that it is downhill until 5370. Cheerfully, spread betting group IG Index pointed out that during the last World Cup the FTSE 100 fell 8.5%.
Still, IG Index was itself one of the big fallers of the day, down 9.5p to 197.5p. Analysts said it could have fallen because of competition worries after smaller rival IFX reported record profits and saw its shares climb 7.5p to 158.5p.
A smattering of bid talk kept traders amused. Medical equipment group Smith & Nephew - tipped to be in the sights of Johnson & Johnson last week - was yesterday mentioned as possible prey for Bristol-Myers Squibb, helping to push its shares up 2.5p to 436.5p.
GUS, owner of Argos, was the subject of another tale, up 5p to 918p on talk that US private equity groups were interested.
And it appears that every time Russia says anything about gas supplies, which it did at the G8 meeting at the weekend by pledging security of long-term supplies to the west, up pops the idea that Gazprom will bid or take a stake in Centrica, which was up 3.75p to 282.75p.
Another perennial target, casino operator London Clubs International, added 4.25p to 113.75p on suggestions of a 130p a share offer. Ladbrokes is usually the name in the frame.
Alliance & Leicester fell 10p to £11.54, losing its early gains after a trading statement failed to inspire investors. Analysts were surprised at the fall, given that Crédit Agricole is waiting in the wings after admitting last month that it was assessing A&L, among others.
There was some genuine takeover action. The jewellery group Signet jumped 2.75p to 98.75p after confirming reports of preliminary merger talks with its US rival, Zale Corporation. But after the market closed Signet, which trades in Britain as H Samuel and Ernest Jones, said the talks had been terminated.
Miners turned in a mixed performance, but recovered from their worst losses in line with a slight revival in the copper price. BHP Billiton was 10.5p lower at 955.5p while Kazakhmys fell 7p to £10.21. But Xstrata edged up 2p to £18.95 on suggestions of a three-way tie up between the company and Canadian rivals Inco and Falconbridge, which would finally resolve a long running bid tussle. Anglo American rose 7p to £19.43 as ratings agency Moody's upgraded the company's debt rating.
A similar upgrade from Standard & Poor's lifted Rolls Royce shares 4.75p to 391p while the continuing fall in the crude oil price helped lift British Airways 5p to 346.5p.
Friends Provident fell 2.75p to 170.75p after Bear Stearns cut its recommendations on the shares, but a Merrill Lynch note on transport companies highlighted Stagecoach and Arriva as the top picks in the sector, which has underperformed the wider market by 7%. The broker believes Stagecoach is now the frontrunner to retain its South West Trains franchise and put a target of 130p on the shares, which climbed 1.75p to 98.75p. Arriva added 5.5p to 519p, compared with Merrill's target of 634p.
Dental group Oasis Healthcare added another 6.25p to 30.5p. The company, which has received a number of approaches, said yesterday that one of them was "at a level considerably above Friday's closing market price of 24.25p". It emphasised there was no certainty an offer would emerge and stressed its "excellent prospects". One of those believed to be a potential bidder, ADP Holdings yesterday said it had increased its stake in Oasis from 12.91% to 13.25%, buying 275,000 shares at 24.5p.
Cool profit
If ever there was a day for an air conditioning company to float on the stock market, yesterday was it. So Worthington Nicholls, which claims to be the UK's largest installer of air conditioning and ventilation systems, made a good debut in the heatwave, closing on Aim at 52p. This compares to the 50p price at which its adviser, Corporate Synergy, placed 46m shares with various institutions to raise £23m. About £12.5m of the proceeds will go to founder Peter Worthington, who set up the business 33 years ago with a £5,000 investment. The rest will be used for working capital and to fund potential acquisitions. It is already believed to be in talks with one potential target. At the closing price the company has a market capitalisation of nearly £34m.