FTSE in-depth: Takeover talk lifts the spirits
Diageo, the world's biggest spirits group, suddenly became the favourite tipple of thirsty punters as intoxicating rumours of an imminent major acquisition helped the shares fizz 13p higher to 1033p on turnover of 40m.
Geoff Foster: The Footsie juggernaut was stopped in its tracks
Rumours were rife again that the Guinness and Gordon's Gin group is about to swallow the outstanding 66% of cognac and champagne group Moet Hennessy that it doesn't already own from LVMH.
Having banked £6bn-plus from the sale, LVMH would then use the cash proceeds to fund the purchase of French luxury goods group Hermes, famous for its handbags and silk ties. Diageo lacks champagne and cognac brands.
It already has the world number one brands in whisky, gin, tequila and liqueurs so adding Hennessy and Moet & Chandon would make great strategic sense.
Analysts say a deal would allow Diageo to consolidate Moet's cash flow rather than just taking a dividend for its 34% stake, and bring Moet Hennessy brands within its wider geographical distribution system. Soft drinks group Britvic, which has often been linked with Diageo, closed 14.7p better at 379½p.
Many other speculators preferred the black stuff - and not Guinness. They chased shares of Aberdeen-based oil explorer Dana Petroleum up to 1330p on revived talk of a £17 a share cash offer from BP, 0.8p easier at 587.5p, before they closed 26p to the good at 1293p. Dana has operations in the North Sea and Egypt and has forecast that output will rise 9% this year.
The Footsie juggernaut was stopped in its tracks by news that soaring petrol prices had pushed the rate of UK inflation up for the first time in eight months to 1.5%, from 1.1%. This provided the perfect opportunity for fund managers to trouser some profits and drag the elite index down 36.74 points to 5,345.93.
The FTSE 250 shed 122.12 points to 9,401.15. Wall Street failed to provide any late inspiration, trading 20 points lower following US Industrial Production data which came in much weaker than expected.
Defensive utilities came into their own with Scottish & Southern Energy adding 22p at 1117p and Centrica 4.6p at 252.2p. Continuing speculation that legendary billionaire investor Warren Buffett is stalking the electricity generator helped International Power improve 1.6p further to 271p.
Supermarket group William Morrison rose 3.4p to 295.5p after Societe Generale advised clients to fill their trolleys after raising its target price to 338p from 311p ahead of tomorrow's third-quarter sales figures.
Clive Cowdery's acquisitive insurance group Resolution, which is still rumoured to have Legal & General (1.4p off at 85.9p) at the top of its shopping list, lost 3.05p to 89.95p.
Goldman Sachs put some five-star petrol in the tank of Arriva, upgrading the transport group to buy from sell. The shares accelerated 28.1p to 486.6p.
Office rental group Regus firmed 2.6p to 103p after Numis tipped it as a cheaper recovery play within support services and offer a structural and geographic expansion growth story. The broker increased its target price to 150p from 120p ahead of tomorrow's investor afternoon.
Old takeover favourite Minerva, the London property developer, soared 15.5p or 37% to 52.25p in response to a £85m or 50p a share cash offer from its largest shareholder KiFin.
KiFin is the vehicle of 77-year old Swaziland tycoon Nathan Kirsh. Dealers believe he has launched a bid in the hope to a flush out another would-be buyer. Dubai-based Limitless proposed a 160p a share offer before the wheels fell off the market last year. After issuing another profits warning with its interim management statement, Wellstream shed 21.5 to 517p. It said that earnings in the first half of 2010 would be shy of expectations as orders from outside Brazil were disappointing.
The highly rated support services product testing group Intertek fell 36p to 1274p after failing to match bullish expectations. Its trading update was in line and failed to offer any extra inspiration to its army of followers. In the event, Altium Securities downgraded to sell from hold and lowered its target price 5% to 1095p.
Intelek, designer and manufacturer of electronic systems for satellite and microwave communications for the aerospace market, edged up 0.5p to 15.5p following satisfactory interim results.
Aurelian Oil & Gas rose 2p to 18.75p after announcing its largest discovery to date in Romania.
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