Traders last week predicted that some of the age-old rumours would re-emerge as the M&A market tries to get back on its feet, and so it has proved. Yesterday's "classic" was talk that the brewing giant SAB Miller was once more targeting C&C Group, which owns the Magners brand.
C&C has plummeted during the cold summer as drinkers turned away from cider over ice. One trader said: "This rumour has been around for ages and it was about again today. It could be true, and it was inevitable C&C would be a target as they are so bombed out."
SAB shed 23p to 1,328p, closing as the second worst FTSE 100 performer, while C&C strengthened 0.27p to 6.20p.
The FTSE 100 was unable to maintain the previous day's stellar rise early on, and opened down as investors took stock. Ryan Kneale, analyst at BetsForTraders.com said: "Once again, bank stocks are the main culprits for the decline, as a mixture of profit-taking and uncertainty about where the US interest rates will go next weighed heavy on investors' minds."
A bearish note from Panmure Gordon helped the UK banks down. The broker said the liquidity crisis was deepening into an insolvency crisis. "If this proves correct, a wave of credit events could trigger payouts on credit derivatives that could dwarf the losses on sub-prime, and tightened risk models could prolong the crisis well into 2008."
It cut targets across the sector. Royal Bank of Scotland was the lowest sector performer, down 4.5p at 541.5p. Barclays shed 10.5p, but rallied with the market to finish up 0.5p.
ITV had investors switching channels as its eagerly anticipated growth plan failed to set the pulses racing. The broadcaster gave up 1.51 per cent to 111p. One trader said the statement had "annoyed" investors, as it said nothing about the channel's HD costs. "They will now be factored into 2008 and probably cause a downgrade," he said.
Kazakhmys and BHP Billiton, the mining groups, were also among the top fallers after going ex-dividend.
Brokers were divided over Drax Group, which shed 10.5p but bounced to close 0.5p up at 627.5p. UBS cut its price target from 575p to 490p, while Goldman Sachs upped its target to 796p. Morgan Stanley said it preferred British Energy, which rose 9.5p to 495p.
Despite very little volume on a day that one trader said "was more like August than September", the market surged at the close, ending 25.5 points higher at 6,306.2.
On the second string, Charter was up after its interims were well received. The engineer boosted pre-tax profits by 32 per cent despite currency movements, sending the shares up 3.51 per cent at 1,180p. Amec continued its strong performance this month, and finished the highest FTSE 250 climber on the day, up 4.5 per cent at 731.5p.
It has been a volatile few months for Southern Cross Healthcare Group, but its shares were on the up after it made divestments. The company has sold four care homes and is expected to unload a further three by the end of the month, worth a total of £23.8m. The shares rose 2.62 per cent to close at 528p.
Emap's shares were up in the morning after it sold a divestment of its own. Profit-taking sunk the stock after news the publisher had sold its Australian division to ACP Magazines for A$94m (£39m), but it rallied to close flat.
Ashmore Group fell in the second string despite investor backing for a strong set of interims. The shares closed down 3.52 per cent at 247p after it unveiled a placing of 24 million shares at 240p each. Traders remained upbeat about the stock, saying most was staying in staff hands.
Restaurant Group was among the worst mid-tier performers. It fell 4.38 per cent after investors locked in gains after the company reported a 30 per cent bump in pre-tax profits. It closed at 306p.
Outside the FTSE 350, there was much activity in International Ferro Metals, which disclosed disrupted furnaces could harm output by up to 11 per cent. The shares fell 30 per cent on the news, but strengthened as traders saw potential buying opportunities. It finished 15.49 per cent lower at 90p.
Many of the small caps were driven up by positive results, with Prostraken among the top risers. The pharmaceuticals group rose after investors were impressed with its expansion plans. Pre-tax losses narrowed, and the group said it was "vigorously pursuing options" to break into the US. It rose 12.73 per cent to 62p.
Vyke Communications continued to rise, as traders piled in before next week's results. The stock has almost doubled since the end of August, and rose a further 2.25 per cent at 136.5p.
Traders will be watching with interest as Craneware comes to AIM today. Its shares were oversubscribed. KBC Peel Hunt raised £20.5m and the group will have a market capitalisation of £31.9m.Reuse content