Market Report: Biffa rises as French set sights on our rubbish

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The Independent Online

The waste management group Biffa was in focus yesterday, after speculation late in the day that it had become a takeover target. France's Veolia Environnement is reportedly pre-paring an assault on the group, which demerged from Severn Trent in Oct-ober, sending the shares up 3.74 per cent to 256.75p.

The market widely expected Biffa to come under scrutiny from the big players in Europe, but any potential offers were derailed by the market turmoil. The share price could be seen as particularly attractive to rivals, after falling from 347p in February to a low of 221.5p last month. Time will tell if the rumour is worth recycling or is plain old manure.

Other vague speculation swirling round the trading floors yesterday included supposed interest in Rest-aurant Group, owner of the Garfunkel's chain, which closed up 6.25p at 311.5p. Another investor said he had heard talk of a potential takeover bid in the housebuilder McAlpine, which closed up 5.5p at 485p.

The real estate investment trusts suffered on the top tier, with Hammerson the worst performer in early morning trading after releasing first-half results. One trader said: "The numbers actually read pretty well. It went up first thing before falling, probably on a bout of profit-taking." Another to suffer early on was Segro, which has fallen more than £2 since May. The talk is that the stock may fall out of the FTSE 100 in the quarterly reshuffle this month. It fell 11.5p before rallying to close 2p higher at 550p.

The market was cautious, and spent the session zig-zagging between positive and negative territory. It leapt towards the end of the day after taking the lead from Wall Street, and closed up 61.6 points at 6,367.8. It was led up by Shell, which ended as the top performer after agreeing a deal to sell liquefied natural gas to PetroChina. It closed up 56p at 1,985p.

The top performers in the second division were driven by positive interim results. Soco International was the pick of the bunch, rising 7.3 per cent to 2,165p after it indicated it had hit the largest discovery in its history. The oil and gas exploration company expects great things from its well in Vietnam, and announced it had increased first-half profits from $15.1m to $17m. Tullow Oil was close behind, despite a fall in profits, over an exploration programme that had investors salivating.

Hays slumped in early morning trading, after a placing of 17 million shares at 154.5p. Dresdner Kleinwort sold the stake in the UK's largest recruitment company for £26.3m, sending the stock down 2.5 per cent to 156.5p. Another to hit the skids was Brit Insurance, which warned the second half of the year would not match the first. Pre-tax profits were up slightly after a solid underwriting performance, but it was not enough to prevent a 2.82 per cent slide to 344p.

Traders are watching Songbird Estates with interest. First came talk last Friday that the vehicle, which runs Canary Wharf, was set to be overhauled to unlock hidden value. News has since emerged that former Wharf chairman Paul Reichmann had taken a 4.2 per cent stake in the company. The Canadian property developer "might want a hand in how the company shapes up following the restructuring", one trader suggested. Songbird closed up 4.75p at 267p.

Top of the growth risers in the morning was Cozart, the medical diagnostics group. The company's shares rocketed by more than a fifth to close at 51.5p after it revealed it was in "advanced discussions with a third party" over a full takeover.

Merger talks helped boost the computer game company SCI Entertainment Group. The group has had a poor year and issued a profits warning in July after a slower-than-expected take up of the Playstation 3. It closed up 13.1 per cent at 384p. Servicepower Technologies soared after winning its largest ever contract. The win, worth £2.2m, from a US insurance company, sent the shares up 11.29 per cent to 17.25p.

The UK sub-prime mortgage lender Elephant Loans & Mortgages had some welcome news after a steady decline in its share price this year. The stock rallied 9.1 per cent to 1.5p after it announced a three-year partnership deal, which will generate "a significant number of loans and re-mortgage completions", its chief executive Gary Miller-Cheevers said. The company did not name its new partner.

At the other end, Media Square was off 20 per cent after admitting its earnings for the year to next February "are likely to be materially below market expectations". The marketing communications group closed down at 6.87p after a trading update blamed revenue shortfalls and restructuring costs. Also on its way down was Hitchens Group, which almost quad-rupled in value on its first four days on AIM last month. It has been downhill since then and the stock shed a further 22 per cent.