Yesterday's trading: Rumours send Footsie racing
The mouth-watering prospect of yet more juicy merger and acquisition activity drove the London market higher still.
All the major FTSE indices raced away amid rumours that another multi-billion pound takeover deal will hit dealers' screens before the end of the week.
The Footsie touched 6369.7 before closing 28.4 points up at a six-year peak of 6346.3, while the FTSE 250 climbed 72.9 points further to a record 11,479.4.
Not to be outdone, the FTSE 350 advanced 15.9 points to an all-time peak of 3342.1. Clem Chambers, boss of the financial website ADVFN, points out that since February 2005 it has returned over 33% compared with the 29% of the UK's leading index. This surely suggests there is still plenty more upside for the Footsie.
Smoke signals spouting from many dealing rooms suggested Imperial Tobacco could soon set the market alight. Shares of the cigarette giant were puffed up to 2220p before they closed 29p higher at 2214p on revived gossip of a £19bn cash offer from US giant Altria, the owner of Philip Morris. Altria has announced plans to spin-off its food arm Kraft and is on the acquisition trail.
Following the £9bn-plus takeover by Japan Tobacco of Gallaher, analysts expect more significant deals to take place in the sector over the next six to 12 months. JP Morgan reckon Imps could fetch up to £28 a share.
Almost 40m DSG International shares changed hands, that's more than four times Monday's total, as speculation about a possible private equity or management buy-out bid intensified. The leading European specialist retailer of consumer electronics sparked 3¾p higher to 173¾p.
Building materials giant Hanson rose 16½p to 803p on rehashed talk of a £10 a share bid from Mexico's Cemex.
Stakebuilding chatter accompanied a 4½p gain to 548½p in British Airways. Last year Emirates Airlines was rumoured to be stalking the crown jewel in global aviation.
US broker Morgan Stanley raised its target price 17% to 620p and said BA presents an 'interesting opportunity'. But there is risk related to the completion of pension, wage and work practice negotiations with various union constituencies.
Cable & Wireless buzzed 5¼p higher to 179½p on revived Deutsche Telekom bid rumours. Undeterred by the sale by UBS of 15m shares at 511p, punters continued to gorge themselves on J Sainsbury in the hope that the CVC-led private equity consortium will table a 550p a share cash offer soon.
The UK's third biggest supermarket retrieved a 2¼p fall to finish 6½p higher at 516p. Sainsbury is 'in play' and once one bid is tabled, dealers are confident others will follow.
Rival William Morrison gained 8p at 311p and Tesco 4½p to 438¼p after UBS lifted their target prices to 360p from 340p and 550p from 470p respectively. The broker says Tesco has freehold assets of £22.7bn and Morrison's £7bn.
ICI, still said to be on Akzo Nobel's shopping list, added 12p at 475¼p.
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Struggling broadcaster ITV edged up 1¾p to 112½p ahead of the expected sale of its 9.99% stake in Liverpool Football Club for £17m-plus.
Granada, which merged with Carlton Communications to form ITV three years ago, paid £22m for the stake in early 2000.
It is selling the stock to two American investors who are buying the Anfield club for around £219m. Dealers believe its 10% stake in Arsenal Football Club will be the next to go. Recent rumours suggested it has been offered £6,200 a share for the stock, compared with the current price of £4,900.
Rumours it has found a buyer for the Racing Post helped Trinity Mirror rise 18p to 513½p.
First Group taxied 2½p forward to 562½p amid growing speculation it is about to climb aboard Laidlaw, the US bus company that owns Greyhound.
Specialist multimedia and marketing group Adventis jumped 6p to 51p as the City warmed to its £2.65m acquisition of LeapFrog Medical Communications, a leading medical education company.
Following completion of its first major local authority contract (Swansea) worth £0.92m, TEG gained 5p at 105p. Broker Canaccord says buy and has a target price of 168p.
• MTI Wireless Edge added 1 ¼p at 48 ¼p after receiving a £500,000 order from an existing client for development and manufacture of naval antennas.
It represents one of the largest military orders ever received by the manufacturer of flat panel antennas for fixed wireless broadband. Annual results are due on February 19 and, by all accounts, will not disappoint.
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