For the second day running fashion retailer Next was the stock to watch.
Its shares jumped to another record high, up 51p to £23.53 on continuing talk of a £25 a share private equity bid, with the existing management involved. There was also a positive note from analysts at Exane BNP Paribas, who upped their price target to £27.
Seymour Pierce analyst Richard Ratner said he rated the shares as outperform on fundamentals alone, but suggested a private equity bid could work.
"This is because, despite the freehold property only being just in excess of £70m, there is only a small pension deficit of £47m and the net debt is almost covered by the Next Directory debtors book, which could be securitised," he said.
Not everyone is convinced. "Next is the biggest sell under the sun," said one trader, pointing out that like-for-like sales were still falling, albeit more slowly, and it faced intensifying competition from a resurgent Marks & Spencer among others.
Still among the retailers, J Sainsbury added 1p to 552p as its fourth-quarter sales beat analysts forecasts. The main focus however is still on a possible bid, with a CVC-led consortium, US group Bain and even Asda tipped as possible predators. Property entrepreneur Robert Tchenguiz is also involved, upping his stake to 4.5% this week.
CVC of course has already shown its hand and has another two weeks or so to make its mind up one way or the other.
Some traders believe a 585p a share offer could come any day now.
ABN Amro said it was likely to edge up its earnings forecasts for the year after the trading statement, and said it believed a bid of between 550p and 600p was likely.
Again, not everyone agrees.
Panmure Gordon advised clients to sell, saying: "We think the market is wrong to assume that three years after not being allowed to acquire the number four player in the market [Morrison], Asda would be allowed to acquire the number two. So the 'if there's one bid, there's bound to be three' theory is flawed." But it added: "Whatever the downside risk was without a bid, then it must be lower now. This statement shows that the earnings recovery is stronger than both we and the market had expected."
Citigroup also issued a sell note, saying a bid was still in the balance, while Seymour Pierce kept a hold recommendation.
Meanwhile Alliance Boots slipped 8p to £10.13 as it said trading was in line with expectations. Again, investors are awaiting more news on the possible £10 a share offer from KKR and deputy chairman Stefano Pessina.
Another surge in the oil price on continuing tensions with Iran helped push BP 8.5p higher to 552p and Royal Dutch Shell A shares up 14p to £16.98.
The price of crude hovered around $64 a barrel, after spiking to $68 last night in the US on talk - later denied - that an American naval vessel had clashed with Iranian forces.
Power group Drax climbed 13.5p to 779p on the back of the crude price, with a smattering of bid talk thrown in for good measure.
For the third day running London shares started brightly enough, only to fall back after Wall Street opened. The catalyst this time was a testimony by US Federal Reserve chairman Ben Bernanke before Congress, where he said - among other things - that the uncertainties surrounding the US economy had increased in recent times, especially growing worries about the housing market.
As he spoke the Dow Jones Industrial Average dropped like a stone, down by more than 100 points by the London close, not helped by weak US durable goods figures. As a consequence, the FTSE 100 ended 25.4 points lower at 6267.2 after a calm opening.
Martin Slaney, head of spread betting at GFT Global Markets, said: "We have had a triple whammy today of higher oil prices, Fed Chairman Bernanke's talk of economic uncertainty and weak US durable goods data. London shares have put up a decent fight for a while, thanks to continued M&A buzz supporting many blue-chip shares, but this afternoon's developments have now started to take their toll here too.
"If you look at the text of Ben Bernanke's testimony, there were plenty of positives – such as the sub-prime crisis being unlikely to spread to the wider market, and inflation appears to be contained – but any negatives seem to be outweighing any positive news for these markets."
Fund management group Amvescap was the biggest faller in the leading index. It lost 30p to 565p on reports in the Wall Street Journal that Deutsche Bank had poached 16 money managers, who between them run 20% of Amvescap's $465bn in assets. This follows earlier reports that Amvescap was suing Deutsche for trying to raid its global fixed income team.
HSBC slipped 2.5p to 882p on vague talk the banking group might make a move on insurance giant Prudential, down 10p to 711p.
But publishing group Pearson - recently fuelled by bid or break-up speculation - edged up 0.5p to 853p despite ABN Amro advising clients to sell. "We believe Pearson shares price in a break-up of the group and that these expectations will ultimately be disappointed," said ABN.
Aberdeen Asset Management added 8.75p to 205p after the fund management group issued an upbeat statement. Altium Securities kept its add recommendation after the news.
Online gambling group PartyGaming lost 1.25p to 48.75p as the company hosted an investor and analyst day in Gibraltar.
But the disaster of the day was camera retailer Jessops . Its shares slumped 31.5p to just 15p as it issued its second profit warning in four weeks.
Lower down the market Vislink - which supplies microwave and satellite video and data links and CCTV systems - jumped 2.75p to 90.75p after better-than-expected full-year results. Profits doubled to a record £12.6m and chairman Bob Morton - who intends to step down at April's annual meeting - was upbeat about future prospects.
The company is concentrating on organic growth but is also on the lookout for acquisitions of up to £30m, either with complementary technologies or to enhance its defence and security business. Traders said there was not likely to be anything within the next two months, but there would certainly be purchases within the next two years.
Vislink could also be a target for a larger technology company, dealers believe, since rivals have been bought up at higher ratings than Vislink's current share price.
But Oxonica, a specialist in nanomaterials, dropped 16.5p to 117.5p after it reported inconclusive results from a vehicle trial in Turkey of its Envirox products designed to increase fuel efficiency.
"This is a clear disappointment," said Panmure Gordon. "While investigations will determine the reasons, we have to take a pessimistic view that [Turkish group] Petrol Ofisi will not continue with the catalyst. We have cut our price target from 200p to 115p and reduced our recommendation to hold from buy."