A host of new takeover tales and some upbeat results announcements helped push the market higher yesterday.
Insurance giant Legal & General rose 4p to 153.5p on speculation of a possible bid from Holland's Aegon, which operates the Scottish Equitable brand in the UK. At an investors' conference in New York this week the Dutch company said it was keen on international alliances, and it has said in the past it wants to expand in the UK. This was enough for traders to put L&G's name in the frame.
Prudential was also higher, up 15.5p to 662p on talk that HSBC may be considering an offer for the business, although dealers said HSBC was also being linked with mortgage bank Bradford & Bingley, up 12.25p to 459.25p.
UK insurers are frequently tipped as targets for overseas predators, with Axa and Generali often mentioned. Yesterday, however, analysts at Collins Stewart said Generali could be in the sights of AIG, which is three times its size.
Elsewhere paints and chemicals group ICI was also put in the bid frame by Collins Stewart. Its shares rose 14p to 422.75p as the broker said a cash or share offer from Dutch group Akzo Nobel would create the global leader in coatings. Collins Stewart said the regulatory issues would be minor - Akso might have to sell its Crown paints brand in the UK which competes with ICI's Dulux business - and Azko could help fund the deal with a sale or flotation of its Organon pharmaceuticals division.
"Azko's chief financial officer described ICI as 'a beautiful business' in July 2006, hinting it was on Azko's radar screen," said Collins Stewart. It also pointed out the ICI management was heavily incentivised with current and potential options.
Among the other bid suggestions, Numis said it believed mining group Xstrata, up 52p to £22.55, could participate in a break-up of Anglo American, up 11p to £23.68, following a site visit to Xstrata's South American operations.
Leisure group Rank, which is in the throes of selling its Hard Rock business, added 16.5p to 272.5p on talk of interest from an overseas company wanting to get involved in UK gaming, or alternatively, from private equity groups. A huge turnover of shares in the company on Tuesday sparked some initial interest, but this seems likely to be an erroneous trade.
On the results front software and services group Sage was 18p better at 259p after full-year profits of £221m and better-than-expected organic growth. Collins Stewart analysts reiterated their buy recommendation with a 335p target, saying the shares traded at an unwarranted discount to its peers.
Plumbing and building materials group Wolseley rose 45p to £11.80. At its annual meeting it said first-quarter results would be hit by a weak US housing market, but said it was still confident of outperforming the markets where it operated.
With all this going on the FTSE 100 index recovered 58.5 points to 6084.4 by the close, while the FTSE 250 added 168.9 points to 10666.1.
The mood was helped by an opening rise on Wall Street after the release of official statistics showing the US economy had grown in the third quarter faster than first thought. US GDP grew by a revised 2.2%, compared with a forecast of 1.8% and higher than the 1.6% originally reported. New home sales fell in October but prices showed an increase. The news encouraged those who hope the US economy will not slip into recession, and the dollar edged higher after its recent falls.
There were some negatives out there, however. After the Russian claims against Shell over the Sakalin oil and gas project, came news yesterday that the country's environment agency plans to recall some licences from subsidiaries of Peter Hambro Mining. The company's shares fell 165p to £10.25, a 14% drop.
Shell has been fined €161m (£108m) for its part in a cartel fixing the price of synthetic rubber used to make tyres and other products. Shell edged up 1p to £18.08.
Next lost 22p to £17.73 on concerns that the current mild weather means consumers are not stocking up on the retailer's winter ranges.
But property website owner Rightmove climbed 20.25p to 343.75p. Analysts at Numis began coverage of the stock with a buy recommendation and a 413p target price.
Autonomy, the specialist software business, added 17.25p to 516.5p after Goldman Sachs said the market was underestimating the growth potential in Autonomy's core products, and it believed the company could be an attractive target for a larger supplier.
Lower down the market Corporate Synergy, the corporate finance and broking firm, added 1.25p to 22.5p after a line of 7.5m shares was bought at 25p. There are hopes of consolidation among smaller financial groups, but this deal is believed to be institutional buying on the basis the shares are undervalued.
Corporate Synergy advised one of the big risers, gaming group Leisure & Gaming, on its restructuring, which included the sale of its US operations. Leisure & Gaming's shares came back from suspension and jumped 4.75p to 13p.
Sir Tom goes shopping
Jersey-based home-shopping group Flying Brands attracted some interest yesterday. Its shares climbed 7.5p to 316p on news that Scottish entrepreneur Sir Tom Hunter had snapped up 29.9% of the company at 312.5p a share.
Sir Tom bought the shares, through his West Coast Capital vehicle, from chairman Paul Fraser and director Stewart Newton, who will both be stepping down from the board. Two West Coast representatives will become directors. Bridgewell analysts advised clients to buy the shares, despite a mixed trading statement issued by the group.
"The emergence of West Coast... could increase speculative interest, despite the fact the investment is being characterised as a long-term investment," said Bridgewell.