Global concerns weighed heavily on the market yesterday, but potential bids for second-liners Morgan Crucible and Spirent provided some excitement for investors.
Mining shares fell back after the start of a strike at the Escondida copper mine in Chile, where BHP Billiton has a majority stake. Last-ditch talks to avoid the pay dispute were held over the weekend but came to nothing. BHP lost 27p to £10.03, helping push the FTSE 100 index 60.6 points lower to 5828.8.
A rise in the oil price to an all-time high did not help sentiment, refuelling concerns about a slowdown in the global economy. Oil moved ahead around $2 a barrel on continuing fears about an escalation of the violence in the Middle East and news that BP had begun shutting down Alaska's Prudhoe Bay oilfield after it discovered a leaking pipeline. BP lost 13.5p to 622.5p - a drop of 2.12%.
Investors were also nervous ahead of tomorrow's Bank of England inflation report and today's meeting of the US Federal Reserve. No one is quite sure whether the Fed will raise rates or leave them on hold, and this uncertainty is not something the market likes.
On the takeover front engineering group Morgan Crucible jumped 48.5p to 282p. The shares had been rising steadily during the day and shortly before the market closed the company confirmed it had received a preliminary approach that could lead to a cash offer. Analysts said industrial group Saint-Gobain or a financial buyer could be predators.
Morgan Crucible, which makes carbon and ceramic components for industry, is valued at more than £800m at its current share price. It released well received results last week. "This is a bit surprising," said Michael Blogg of broker Arbuthnot. "Any potential buyer could have bought the shares at much lower levels during the last two years. Maybe they think there is now more certainty [after its recent restructuring]."
Spirent, the telecoms equipment-testing group formerly known as Bowthorpe, added 2.25p to 40p on talk of stakebuilding before its results on Thursday. Late last week two chunks of stock totalling about 50m shares changed hands and today another 62m shares were traded. Possible suitors include its US rival Agilent and the private equity group Hanover Investors.
MFI added 2.25p to 90p on hopes it was close to selling its loss-making retail business to Merchant Equity Partners, while support services firm Serco rose 1.5p to 338.5p as it confirmed it has been holding talks about a possible disposal of some of its PFI investments.
In a classic example of investors seeking out defensive stocks, consumer products group Reckitt Benckiser was wanted, up 25p to £21.56. And British Airways added 1.75p to 377.25p on further consideration of Friday's results, which showed a 20% rise in first-quarter profits. But easyJet lost 8.25p to 423.25p after it warned that costs for the full year would be higher than expected and said capacity growth would slow.
ITV slipped 0.25p to 101.5p before tomorrow's figures. There is increasing speculation that the chief executive, Charles Allen, intends to step down, and the TV company is also seen as vulnerable to a bid.
Motor dealer Pendragon went into reverse, down 30.5p to 510p. Profits for the first half rose 15%, helped by the takeover of its rival Reg Vardy, but analysts said there were doubts about the company's future growth.
United Utilities lost 3p to 653.5p, but Deutsche Bank analysts issued a positive note on the stock. It moved its recommendation from hold to buy, saying the company's recent underperformance looked unjustified and it was one of the most undervalued water businesses.
Lower down the market, Intec Telecom fell nearly 30%, down 13p to 30.5p after it warned on revenues because of delays to a "small number of significant contracts". Shore Capital downgraded from buy to hold, and said the company's statements suggested there were risks to the broker's profit forecasts.
Northern Lynx, a property group, added 0.5p to 6.25p after investing £87,000 in a new unlisted company, Hilton Ventures, which has been set up to invest in the financial sector. The deal will give Northern Lynx a 49.7% stake in Hilton Ventures.
Cambrian Mining climbed 1.75p to 149p as it took a 50.5% stake in Xtract Energy, which has built up a portfolio of mineral resources in Australia. Xtract added 0.125p to 5p.
Mobile music group Mobile Streams was steady at 45.5p. It has bought the Californian mobile production company the Nickels Group for up to $700,000 (£367,000). "Although a small transaction in financial terms," analysts at Bridgewell said, "this deal is another move in the right direction and follows in the footsteps of the acquisitions of Mobilemode and Cyoshi Mobile." The broker put a buy recommendation on the shares.
Finally mobile phone content group Monstermob - which saw its shares slump last month after Chinese regulators said they would clamp down on the sector - added 14.5p to 56p on vague bid talk, with suggestions of a possible management buyout doing the rounds.
Failing health
It looks like the end for healthcare minnow Provalis, which makes diabetes testing kits. The company warned at its half-year results in March that it needed further funding to develop its supposedly key product, the in2it test, and had started talks about a disposal of some or all of the business. Yesterday it announced an agreement to sell its medical diagnostics business, including in2it, to the UK subsidiary of America's Bio-Rad Laboratories for £1.6m.
Once the sale is complete, the rest of the company will be placed into liquidation, the share listing cancelled and £1.4m - equivalent to 0.4p a share - will be distributed to investors. The shares, which 10 years ago stood at nearly 400p, slumped from 0.75p to 0.325p yesterday, a 56% decline.