The FTSE 100 was little changed all day, up 20.5 points at 6417.8, as high metal prices managed to offset a whirlwind of activity surrounding the Sainsbury's bid.
But the supermarket chain was the talk of the town as the private equity bid for the company looked close to collapse. Sainsbury's shares fell 22.5p to 538.5p, making it the biggest faller on the FTSE.
Texas Pacific and Blackstone have both pulled out of the private equity consortium bidding for the retailer, which means only CVC is left after KKR opted out last week. CVC raised its offer to 582p-a-share late last night, valuing the company at £10.1bn, but it faces a tough ride as the Sainsbury family is still opposed to selling out. In addition, the private equity firm also has to overcome the opposition of the retailer's pension scheme trustees before Friday's deadline to put up or shut up.
Elsewhere in the M&A arena, Scottish & Newcastle fell 11.5p to 595p as the excitement surrounding a number of potential suitors for the company faded away. The brewer, which owns brands like Foster's and Kronenbourg 1664, has been the subject of much takeover speculation. The most recent rumour is that SABMiller, an S&N rival, is contemplating a £6.5bn offer for the company. S&N has also been linked to Carlsberg and Heineken. SABMiller was down 9p at £11.15.
On a more positive note, the big miners were up as metal prices increased to new highs amidst strong growth signs from China and the US. Copper prices, for example, stood at around $7,760 a tonne, compared to $7,340 at Thursday's close after Chinese imports rose and London Metal Exchange stocks fell. Analysts at Numis Securities said: "The latest import data show China's demand for key commodities has not waned, and that producers of these commodities should continue to benefit from higher than historic average prices, leading to strong earnings."
Vedanta Resources, the Indian miner whose year-end production numbers are out tomorrow, was the top riser, up 50p to £14.32. Rio Tinto followed close behind, rising 75p to £31.20, BHP Billiton, the world's largest miner, increased 22p to £11.81. Xstrata rose 44p to £27.57 as it also announced it had made a recommended offer of A$391m (£163m) for Gloucester Coal, an Australian coal miner.
Royal Bank of Scotland rose 4p to £20.08 amid reports it was in exploratory talks with Spanish bank Santander for a possible joint bid for ABN Amro. This would gatecrash Barclays' plans, as the latter is currently in exclusive talks with the Dutch bank for a possible takeover. Shares in Barclays rose 2p to 735p.
Imperial Tobacco recovered from earlier losses and rose 13p to £22.76, following the rejection of its second offer for Franco-Spanish rival Altadis. The tobacco company improved its bid proposal to €12bn (£8.2bn) from €11.5bn, but the board of Altadis said the offer was not enough. The British company left the door open for another offer as it insisted a combination with Altadis was "strategically compelling and in the interests of both companies' shareholders".
On the FTSE 250, British Energy announced its annual output was slightly ahead of market expectations, adding it had finished repairs at its nuclear power plants. Shares in the company rose 9.25p to 497.25p.
VT Group, the support services and shipbuilding company, rose 1.25p to 494p as it announced it had won a £150m contract to build and manage three offshore patrol boats for Trinidad and Tobago. Charlie Cottam, an analyst at Panmure Gordon, said: "This win has been long-awaited and demonstrates VT shipbuilding's strong competitive position in the OPV [offshore patrol vessel] export market."
But Carphone Warehouse fell 8.25p to 284.75p as Credit Suisse cut its price target from 420p to 400p. Analysts at the bank said they were reducing their March 2008 pre-tax profit forecast to £227m due to new guidance by the company concerning higher costs within both the broadband business as well as investment in its joint ventures.
In the smaller cap arena, Accident Exchange, the vehicle replacement group, plunged 70.5p to 107p as it issued a profit warning. The group said its pre-tax profit for the year to end-April would be below expectations at around £18m. It said it was undertaking a review of the "appropriateness of its current financing structure", adding options under consideration included the possibility of an equity fundraising. In February, the company had already warned that the rate of growth in the third quarter was below expectations.
On Aim, YouGov, the market research agency, rose 122.5p to 945p as it produced a stellar set of first-half results. Sales for the six months to end-January rose 61% to £6.1m, and pre-tax profit during that period increased 64% to £2.3m. YouGov, whose chairman is election pundit Peter Kellner, said the strong performance reflected its strategy of combining innovative product development with geographical expansion and acquisitions.
And finally, Cozart, the medical diagnosis company, took on 1p at 35.5p as it announced it had been awarded a contract with the Scottish Executive to supply its RapiScan drug-testing system. This will be used by the police for mandatory drug testing of anyone arrested for a trigger offence like theft or a drug-related offence.