Another round of bid speculation today helped offset some of the continuing worries about the US housing market and the plummeting dollar.
Whitbread - the hotel, restaurant and Costa Coffee group - added 128p to £19.46 on talk of stakebuilding and a possible £24-a-share offer from US group Starwood Capital. The Starwood tale has been around for a while, but investors seemed to be taking it seriously today.
"Everyone wants Whitbread; there was a lot of buying interest right from the start of trading," said one dealer.
Unilever was also in demand. The Anglo-Dutch consumer business added 36p to £16.83 on hopes the group could be taken over and possibly split up. Danone's bid for Numico earlier this week has sparked this latest round of speculation. Procter & Gamble, Colgate Palmolive or our old friends from private equity were mentioned as possible Unilever predators.
Elsewhere BSkyB jumped 28p to 700p after it added 349,000 new customers in the fourth quarter. In response Bear Stearns raised its price target for the satellite broadcaster from 680p to 820p.
Carphone Warehouse edged up 1.5p to 335.5p despite some negative comments following the Sky figures.
Analysts at Bridgewell said Sky had gained 259,000 new broadband customers, which did not leave much room for rival suppliers such as Carphone.
"Given that there were only 514,000 customers added across the market in the second quarter, this implies Sky is taking a near 50% share, which leaves only 255,000 to be added between Carphone, Orange, Tiscali and others," said Bridgewell.
This suggested Carphone's connections could have been 100,000 to 150,000, added the broker, meaning the company could struggle to meet its targets.
Still among the risers, Astrazeneca added 64p to £26.95 as Morgan Stanley moved from equal weight to overweight, while Morrison Supermarkets rose 8.5p to 313.75p on talk that property entrepreneur Robert Tchenguiz — said to be selling his Sainbury stake — could turn his attention to Morrisons. There was also speculation of a 400p-a-share private equity bid.
In terms of real events, there was an upbeat note from ABN Amro, which raised its target price for Morrisons from 340p to 363p and its recommendation from hold to buy.
Intercontinental Hotels rose 23p to £12.89 after it met investors yesterday evening to sing the praises of its Chinese business. Analysts seemed impressed, with Dresdner Kleinwort issuing a buy note.
"Although [China] is a slow burn in terms of impact in short-term forecasts, the financial implications of success in this market are considerable," said the Dresdner analysts. "We are of the firm belief that it will be a small handful of international hotel branding/franchising companies that will dominate the lodging industry going forward, and InterContinental is well positioned — not least because of its strength in China — to benefit from this."
Dresdner also saw the Intercontinental as a strong buyout candidate — worth perhaps £15-£17 a share — and reminded shareholders that the Barclay brothers had been stakebuilding and now hold around 10%.
But despite these rises, the market's Wall Street-inspired nervousness — mainly on concerns about the US subprime mortgage market — continued.
The FTSE 100 ended 15.8 points lower at 6615.1, although dealers reported thin trading. The leading index recovered from its worst levels as the Dow Jones Industrial Average sat in positive territory by the time London closed.
But the dollar continued to fall, with the pound moving well above $2.03.
A downgrade from Goldman Sachs sent Royal Dutch Shell B shares 29p lower at £21.07. Goldman said the business faced three years of heavy investment without the prospect of material production growth or increased cash flow if the economic environment remains flat.
Meanwhile the prospect of higher UK interest rates continued to dog retailers. Next lost 28p to £19.76, while Home Retail Group was 10.75p weaker at 438.75p.
Technology company Arm slipped 2p to 151.5p after Credit Suisse downgraded from outperform to neutral. "Following the rally of the shares in the last few months, we feel the company's valuation is now demanding," said the bank. "In the short term we see no major upcoming catalyst."
But the same bank helped push Ultra Electronics 11p higher to £11.09. "We believe Ultra's attractiveness as a potential bid target provides downside protection from current levels, while the unlevered balance sheet gives scope from upside from acquisitions," said Credit Suisse.
Transport group National Express reversed 28p to £10.80. The company is slowly but surely running out of opportunities to win a rail franchise, and Goldman Sachs today put the company on its conviction sell list.
Goldman said: "On our estimates, National Express is the most expensive stock in the bus and rail subsector. Given the group's surprising lack of success in the recent rail franchise awards, we expect consensus estimates to fall, reflecting the reduction in rail profits from 2008 onwards as a number of rail franchises expire, with around £70m of working capital outflow accompanying the loss of revenue."
Engineer and project manager Amec added 24.5p to 644.5p after a visit by analysts and investors to its Canadian natural resources business.
On Aim, Allergy Therapeutics fell 26p to 93p after US regulators put clinical trials of its hayfever vaccine on hold. But Empyrean Energy rose 3.5p to 46p as the company issued a positive update on its Sugarloaf prospect in Texas, while cash shell Wadharma Investments added 9.5p to 22p after the reverse takeover of Zambian nickel, copper and uranium miner Kiwara Resources.
Finally Phil Edmonds' White Nile exploration group fell another 11p to 74p after being asked by the Sudanese government to leave a disputed oil block in the country.