Market report: Yesterday's trading

By Geoff Foster for MailOnline
Updated: 05:21 EDT, 13 November 2006

An in-form Footsie flew past 6200 as cash-rich fund managers continued to chase quality blue chips higher.

Widespread speculation that the coming weeks will see at least another two megamergers continued to give dealing rooms that feel-good factor and the close was 32.1 points up at a 5¾ year high of 6214.6.

The FTSE 250 added 23.8 points to its best ever 10425.4. Record-breaking Wall Street dipped 43 points on profit-taking in the early stages, awaiting confirmation of unchanged US interest rates.

Mouthwatering gossip about a £3.7bn or £17 a share private equity break-up for Whitbread sent shares of the Costa Coffeeto-Premier Travel Inn leisure giant racing ahead.

As thirsty punters piled in with some hefty buying orders, it touched 1445p before closing 16p better at a record 1421p. Tuesday's 54p leap following in-line half-year results had made dealers very suspicious that something corporate could be on the menu.

Analysts believe the lower-than-expected £350m cash return to shareholders following the sale of 235 pubs and its stake in Pizza Hut has increased the pressure for a breakup of the group.

Cazenove says there is significant value locked up in the group's property portfolio and has put an £18-a-share sum-of-the-parts valuation on Whitbread.

The tired TGI Friday's restaurant chain is up for grabs, as chief executive Alan Parker strives to restructure the business, but it looks as though he will not get the chance.

Sources suggest GlaxoSmithKline's chief executive Jean-Pierre Garnier has become increasingly irritated with the drug giant's rating and is ready to do something about it.

With that in mind, buyers chased the stock 22p higher to 1511p in the hope that something sexy could possibly be revealed with today's third-quarter figures.

There were suggestions that the group could substantially increase its share buy-back programme but talk that it could announce the disposal of its consumer home products business was dismissed since it has just made an acquisition in that area of the market.

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Rival Astra Zeneca, which many believe one day will end up climbing into bed with GSK to create a European champion, climbed 42p to 3529p on expectations of strong Q3 figures today.

Oriel Securities' analyst Jonathan Groocock advised clients to buy mobile phone giant Vodafone, 1½p better at 131½p. He says with one of the largest customer bases in Europe, Vodafone has potential to leverage its scale and go on the offensive on broadband. A solid set of interim results on November 14 should also help the shares move towards his target price of 150p.

Tate & Lyle's decision to sell its European starch business got the thumbs up and the close was 29p up at 801p.

Revived bid chatter puffed tobacco group Gallaher 27p higher to 884½p. Bats added 36p to 1482p following good quarterly figures from its 42%-owned US peer Reynolds American Inc and ahead of its own thirdquarter numbers today. Imperial Tobacco put on 30p to 1855p.

Numero uno supermarket Tesco gained 4¾p to 396¼p after it bought back a further 2.8m of its own shares at an average price of 395.95p from broker Shore Capital.

On the other side of the street, rival J Sainsbury touched 404¾p before closing 2¾p dearer at 399½p amid a revival of the ancient tale that former Asda boss Archie Norman, together with some private equity 'friends', will soon launch a bid. Termination of bid talks dragged Northgate Information Solutions 11p lower to 82½p. Broker Bridgewell says NIS is still a potential target and the shares look cheap.

Block Shield Corporation gained 4½p to 122p after director Mike Fitzgerald cleared a seller out of 150,000 shares and took his shareholding in the electrical equipment group to 32%.

The clearance of a stock overhang of 2m shares helped Emed Mining improve ⅛p to 9⅛p. Dog of the day on Aim was Amino Technologies, which crashed 29½p to 53p after warning it will incur full-year pre-tax losses of £1.5m compared to a profit of £0.06m last year.

Struggling Internet protocol equipment company Newport Networks jumped 1⅝p to 5⅛p. The company said it knew of no reason for the rise. Pixology, the digital photography software group, soared 9p to 42½p on a bid approach. Buy and Fly! travels promotions group Landround advanced to 41p before admitting it is in talks with its bank and professional advisers regarding a possible financing. Many took profits but the close was still 5½p up at 33p.

• Aim-listed independent power group IPSA added 2½p to 40½p after completing a placing of 6m shares at 6.05 rand or 42p with STANLIB Asset Management, one of South Africa's leading institutions. IPSA last week became the first company to have a dual listing in Johannesburg. It was trading on the junior ALTX market at 47p. I wander how many shrewd boys took advantage of the discrepancy.