Market Report: Barclays in focus as bid fever grips the City

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Bid fever well and truly gripped the City yesterday. After the summer lull, traders are now convinced the run-up to Christmas will see a slew of mergers and takeovers. Here is a collection of the stories doing the rounds of dealing rooms yesterday.

Barclays remained on most traders' radar screens. Last week it was linked with a possible move on its Dutch rival ABN Amro. Yesterday, gossips suggested it might be interested in a bid for the South African bank Investec, 8p higher at 513p. Barclays, via its purchase of Absa, already has exposure to the fast-growing country. Acquiring Investec would nearly double its presence there and leave about 10 per cent of the group's market value in South African assets. Barclays was unchanged at 669p.

Again in the FTSE 100, Compass rose 7.75p to 272.25p on talk of a break-up bid for the catering giant. Clearly some investors believe the story as more than 35 million shares changed hands - many times the volume on an average day. Hanson, a perennial takeover candidate, added 19.5p to 676p on hopes that the building materials group will soon be bought by Cemex, the Mexican cement giant. Cemex is no stranger to making acquisitions in the UK - it bought RMC for £2.3bn last year.

Lower down the pecking order, rumours that the management of St Ives are plotting a buyout of the magazine printer sent its shares 12p higher to 222p. A series of profit warnings have caused the company's valuation to nearly halve over the past 12 months. Analysts took the view that private equity would certainly be interested in backing a buyout of St Ives given its impressive asset base and cashflows, which remain strong despite the profit warnings.

Kesa Electricals improved 6.25p to 327.25p amid talk the German retailer Metro AG could be about to table an offer for the group. From a geographic point of view, a deal makes sense. Kesa would give Metro exposure to both the UK and France. Merrill Lynch also supported Kesa yesterday. It urged investors to buy into the company before next week's interim results. It expects Kesa to post a 39 per cent rise in pre-tax profits to £35m and suggested that market forecasts of profits hitting £155m at the full year stage could prove too conservative.

Likewise, Morgan Stanley got behind Reuters and helped it end the day 16p better at 429.75p. The US broker told its clients that the information provider is "having a good third quarter" and that Reuters' forecasts of 5 to 6 per cent revenue growth this year is beginning to look conservative.

The FTSE 100 closed 30.5 points higher at 5,896.7, while the FTSE 250 gained 61.9 to finish at 9,853.0. Croda International, the speciality chemicals group, rose 21p to 519p after an upgrade from UBS. Raising its recommendation to "buy" from "neutral", the Swiss broker said it is convinced that Croda's management team can make a great success of their Uniqema acquisition.

Imperial Energy jumped 95.5p to 698p after the explorer said it knew of no reason for the recent weakness in its shares. Over the past month, Imperial shares have lost about a third of their value. The company said it had asked relevant regulatory authorities to investigate trading in its shares. To shore up confidence in Imperial, Peter Levine, its chairman and chief executive, bought 50,000 shares at 602p.

There was also director share-buying at Surfcontrol, 6p higher at 462p. Patricia Sueltz, the chief executive of the software group, bought 11,700 shares at between 453p and 456p. Griffin Mining rose 6p to 82p after the Chinese zinc group raised its production by 20 per cent. Griffin is on course to produce 350,000 tonnes of zinc ore per year. Within a couple of years, it hopes to raise this figure to 500,000.

Sibir Energy said on Wednesday that investors can expect progress from its dispute with Sibneft, the oil company formerly controlled by the Chelsea boss Roman Abramovich. Sibir claims that Sibneft stole assets from it. Now that Sibneft is owned by the Russian gas monopoly Gazprom, analysts believe a resolution of the dispute is more likely.

Yesterday came the first evidence of progress as it emerged that Chalva Tchigirinsky, Sibir's biggest shareholder and president, had held talks with Alexander Ryazanov, president of Gazprom's oil business. This is without doubt a step forward and as a result Sibir shares added 20p to 425p. Previous to this, the two companies only communicated via their respective lawyers.