Market Report: Cable & Wireless lights up on takeover chatter

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The Independent Online

Takeover talk was sparse yesterday as the market retreated, although the gossips did dredge up an old classic: France Telecom going after Cable & Wireless.

While the renewed speculation was met with some scepticism, C&W remained among the top risers throughout a weak session, rising 1.99 per cent to 184.4p.

Earlier this week, the UK telecoms group reported solid results which were overshadowed by the departure of Harris Jones, the chief executive of the group's international business. Some traders speculated a difference of opinions over the group's strategy could be behind his decision.

One analyst said: "Chief executive, John Pluthero, is a fixer and a seller, and he will try and do it again. Money sticks to him. France Telecom has been named so many times; it might be right at some stage."

The FTSE 100 fell after New York had reversed its gains overnight. It enjoyed a brief period in positive territory before sinking 96.6 points and closed down 72.5 at 6,359.6.

The worst blue-chip stock of the day was Experian Group. It was smashed more than 13 per cent in the morning after a downbeat results announcement. This came despite the credit reference group more than doubling pre-tax profits to £285m and saying it remains on course to hit full-year expectations. One analyst said the market was worried about Experian's 2008 numbers, but he felt the huge drop yesterday was an overreaction. It closed down 9.53 per cent at 429.5p.

Badly received results claimed several high-profile scalps with British Land down 4.05 per cent to 912p. The group fell as it reported a flat first-half net asset value per share, and added the weak market conditions were not yet over. One analyst said: "There was a feeling yesterday that investors looked at a lot of companies' results and said: 'They're OK, but...'."

The financials dragged on the top tier, with Royal Bank of Scotland the worst, down 3.96 per cent to 448.5p. It was another poor day for Alliance & Leicester. After Wednesday's talk it had had a line of credit pulled, there were rumours of a profit warning. The stock shed 3.14 per cent to 648p.

Barclays shares survived the worst of it as it revealed writedowns of £1.3bn, not as bad as many had feared. It strengthened 36.5p in the morning, but finished 2.5p down at 530.5p.

Things were cheery at Scottish & Newcastle, as Carlsberg and Heineken improved their joint bid to 750p per share. While the offer was a 30p-per-share improvement on its original bid, the market still feels the price has further to go, with the stock closing 2.23 per cent up at 757p. Some analysts believe the group could fetch up to 800p per share.

A standing ovation from Lehman Brothers helped support Scottish & Southern Energy after the previous day's results. The US broker said: "We can only sit back and applaud another robust set of numbers." It rose 1.08 per cent to close at 1,590p.

The mid tier had a few results announcements itself, with Trinity Mirror topping the risers in the morning. Encouraging advertising revenues sent it 2.63 per cent higher to 351p.

The rival publisher Emap strengthened further on increased speculation Reed Elsevier would bid for its business arm. While Reed refused to comment on the speculation in its trading update, chief executive Crispin Davis told analysts the group wanted to boost its business-to-business operation. Emap closed up 1.98 per cent at 877p.

Another publisher, Euromoney Institutional Investor, propped up the mid-caps, down 13.48 per cent to 415.5p. This was despite reporting a rise in full-year pre-tax profits from £35.2m to £41.1m. It suffered as the group warned that growth would be slower, with the full year more testing if financial markets deteriorate further. The gaming company Rank Group was down 1.25p with the market, despite talk of interest from a Malaysian gaming group.

The market makers said the small caps were seeing a lot of business yesterday. While Ladbrokes was floundering, a contract it signed with Playwize sent the software developer soaring 130 per cent to 2.87p. It added it expects to sign other similar licensing agreements in due course.

The telecoms tiddler Spiritel was up 17.95 per cent at 1.15p as it announced its second high-profile contract win this month. After landing a deal with Virgin Mobile at the start of the month, it yesterday revealed it had signed a £1.25m deal with Regent Inns.

Among the fallers was Care UK, which revealed the Department of Health has asked to terminate a contract with one of its subsidiaries. It closed 24.79 per cent lower at 361p.

The worst AIM performer was Nipson Digital Printing, which shed a further 34 per cent to 2.1p after disappointing with its results the previous day.

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