Market report: Yesterday's trading

By Geoff Foster for MailOnline
Updated: 04:28 EDT, 1 December 2006

City watering holes were awash with talk of a £1.54bn or £22-a-share cash offer for Wolverhampton & Dudley Breweries.

Shares of the Wolverhampton-based brewer of Marston's Pedigree frothed up to 1624p before closing 41p better at a record 1581p as rumours did the rounds that Punch Taverns (23p down at 1153½p) will pounce after perusing Wolves' annual results today.

Wolves are expected to roll out pretax profits of £100m for the first time, boosted by acquisitions. Management could also attempt to get shareholders well on side by announcing plans for a return of cash via a possible special dividend.

Traditionally a tenanted pubs operator, Punch diversified into managed pubs when it forked out £2.7bn on the Spirits estate in January.

The deal made it easily the largest pub and bar operator in the UK, with around 9,500 tenanted and managed pubs.

The new 24-hour drinking laws and a smoking ban in all public places from 2007 are a factor of Punch's highly acquisitive strategy and in a highly competitive market, size is important.

A successful offer Wolves would crown an eventful year for chief executive Giles Thorley and his team.

As sterling traded at a 14-year high against the dollar, overseas earners dragged the Footsie lower. Up 24 points at one stage, it traded 40 points off before closing 35.6 points easier at 6048.8.

Profit-taking on Wall Street which saw the Dow Jones replace a 26-point gain with a 64-point loss also exerted late downward pressure on the London market. Additional uncertainty about the Saudi contract left BAE Systems 10¾p down at 387p. Drugs giant Astra Zeneca shed 58p to 2950p, GlaxoSmithKline 20p to 1351p and Pearson 12p to 750½p.

Persimmon, the housebuilding sector's Footsie champion, erected a 40p gain to 1460p on talk it could be about to go on the acquisition trail.

Wilson Bowden, which has received a few approaches, lost a 20p rise to close 10p easier at 2229p. Barratt Developments jumped 37½p to 1104½p and George Wimpey 17½p to 553p.

Buyers switched on to BT ahead of Monday's long-awaited launch of its broadband television service and the close was 7p up at 284¼p on turnover of 55m.

The launch will see BT offer all Freeview channels alongside an array of on-demand content.

Customers who want the service will need a set-top box and a BT broadband connection, but will not be required to pay a monthly subscription, which BT believes will be a key selling point.

Revived bid hopes lifted platinum miner Lonmin 75p to 3070p. BHP Billiton's (11p dearer at 965p) chairman Don Argus said at Tuesday's AGM in Brisbane that the mining giant could seek acquisitions.

Cantor Fitzgerald's head of research Stephen Pope believes Vedanta Resources (17p easier at 1266p) is a possible target.

More than 37m BG shares changed hands and the close was 11½p higher at 684½p. For the umpteenth time this year, punters dreamt about a possible bid from Total of France.

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Supermarket giant Tesco eased 1¼p to 391¼p. Panmure Gordon forecasts a strong third-quarter earnings performance on Tuesday. The broker expects UK sales to be up by 9% and group sales by 10%.

Like-for-like sales growth to be 5.5% expetrol, compared with 5.5% a year ago and 6.6% in the second quarter. The current share price still undervalues the performance of Tesco's retail assets, says Panmure.

Grosvenor casinos group Rank rose a further 5½p to 278p as rumours of a £3-plus-ashare cash offer from betting shops group Ladbrokes (½p up at 403¼p) intensified.

Property website Rightmove, in which takeover target Countrywide (6p up at 508p) holds a 22.5% stake, jumped 26¼p to 370p as management wooed potential investors in the US.

Spreadbetter IG Group advanced 11¾p to 295¾p on talk trading is well above budget.

Floated at 79p in August, ReneSola soared a further 38p to 267p. The manufacturer of solar wafers for the photovoltaic industry announced a significant uplift to its planned 2007 production capacity expansion.

• Rumours of a bid approach helped Ocean Wilsons steam 32½p ahead in a thin market to 487½p. The shipping and ports group has an enviable exposure to the fast growing Brazilian economy and its Tecon terminal in Rio Grande is the country's second largest container terminal. It ships tonnes of steel and iron to booming China. Private equity groups are believed to be sniffing around.