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Paint battle adds colour to dull day

This article is more than 16 years old

Paintmaker ICI was the latest big company to be gripped by the current buyout frenzy yesterday but a jump in its shares was not enough to maintain the FTSE 100's winning streak.

The index had approached a seven-year high on Friday but yesterday closed down 28.9 points, or 0.43%, at 6703.5 as renewed fears about the need for higher interest rates at home and abroad combined with a flurry of profit-taking.

Hogging the attention on a quiet day for corporate news, Dulux paints owner ICI shot up on expectations of a bidding war after it rejected a £7.2bn bid from Akzo Nobel, its Dutch rival and maker of Crown paints. The rebuffed bid prompted hopes of higher offers. The shares closed up 85.5p, or 15.6%, at 634.5p.

The speculation about another bid for J Sainsbury continued but the shares turned around part-way through the day to end down 6.5p at 583.5p. Tesco slipped 3.5p to 456.75p.

Among the risers, mining group BHP Billiton was up 11p to £13.69 following reports it is again eyeing a takeover of aluminium producer Alcoa.

There was further M&A talk surrounding United Utilities but as the wider market slipped back, the company's shares erased their gains to end unchanged at 770p.

Indeed, for all the hopes of bids in virtually every sector of the market, there were some sizeable dips for some of the blue chips that kept the FTSE 100 in the red for most of the session.

A lot of the falls were prompted by traders cashing in after a recent good run. Smiths Group had been up in recent weeks on talk of a hedge fund building a stake in the engineering company. Yesterday the shares fell back 30p, or 2.5%, to £11.79. Barratt Developments also succumbed to profit taking, down 29p at £10.46. As fears of rising interest rates and their effect on the property market loomed large, Barratt's fellow housebuilder Persimmon shed 43p, or 3.4%, to £12.33.

It was left to the Aim to provide some much needed excitement on a quiet day. The Indian Film Company brought some Bollywood glamour to the junior market, jumping 10% on its debut.

Set up to invest in Indian films, the group listed at 100p and finished the day at 110.5p. It described the listing as giving international investors a chance to "reap the benefits of the structural changes and growth opportunities being thrown up by the Indian film industry".

Staying with media, Bob Geldof's group Ten Alps added 2.5p, or 4%, to 65.5p after it flagged the benefits of its investment in online TV. It also announced the acquisition of factual content business DBDA. Pre-tax profits for the year to March 31 were up 36% to £2.26m. Chief executive Alex Connock said by making factual programmes for television, radio, print, online TV and conferences it was able to meet the demands of advertisers and audiences.

Nick Batram at house broker Collins Stewart said the results were slightly ahead of his expectations.

"Since coming to market, management has consistently delivered. At some point the broader market will wake up to what has been achieved and also appreciate the exciting future facing the group," he said.

Back on the FTSE 100, Financial Times publisher Pearson was under pressure after reports it was considering a bid for Dow Jones, the owner of the Wall Street Journal, that has attracted a $5bn (£2.5bn) approach from Rupert Murdoch. Reports over the weekend said Pearson was considering joining forces with America's General Electric, which controls NBC Universal and its CNBC business news channel, to make a counter-bid. All the talk of taking on Mr Murdoch unsettled Pearson's shares and they closed down 11p at 862p.

On the FTSE 250 index of midcaps, it was Tullow Oil that stole the limelight after it unveiled a significant oil discovery in Ghana at a site co-owned with Anadarko Petroleum. Chief executive Aidan Heavey described the discovery as a "major event" for Ghana and for Tullow Oil.

The bigger-than-expected find lifted the oil and gas firm's shares up 51.25p, or 12.5%, to 460.25p and prompted upgrades from oil analysts at Jefferies and KBC Peel Hunt.

Engineering group Invensys was not far behind on the gainers board amid talk it could get a £5-per-share bid from Germany's Siemens, which declined to comment. Traders said the speculation followed a Capital Markets day held by Invensys on Friday and strategic talk there of potential scope for re-organisation.

"Given that it's been a relatively quiet start to the week today this talk has caught the market's attention for now, although there is nothing further to substantiate it at this stage," pointed out Martin Slaney at GFT Global Markets.

Invensys shares closed up 7.75p, or 2.1%, at 382.75p. But the gains were not enough to lift the midcaps index out of the doldrums. The FTSE 250 lost 52.1 points to 11,947.5.

Back on Aim, European Goldfields rose 8.5p to hit an all-time high of 270p after announcing a fundraising for its mining projects in Greece and Romania.

Sporting chance

Sports marketing and media company Essentially Group has made no secret of the fact it is on the acquisition trail and an announcement is expected soon. The Aim-listed company, which acts as agents to rugby players and formula one drivers, has been going round the City for a fundraising. Word in the market is that news of a fresh acquisition in the sports marketing area could come as soon as this week. The fundraising is said to have gone well and follows a confident outlook from Essentially Group in its latest results statement. The company hopes the global appeal of sports events and their growing reach thanks to new media platforms will continue to provide lucrative opportunities for it to fix sponsorship deals. The shares were flat yesterday at 16.5p.

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