Market Report: London Clubs rises on talk of Malaysian bid

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The Independent Online

London Clubs was flavour of the day among City traders amid growing hopes that the casino group's days as an independent entity are numbered. If you believe yesterday's gossip, a 155p-per-share bid is on the way for the company before the end of the month.

London Clubs, 4.5p higher at 141p, has been on takeover alert since the Malaysian conglomerate Genting built up a 29 per cent stake in the company and a 20 per cent holding in its rival Stanley Leisure. The consensus in the Square Mile is that Genting will eventually push through a merger between the two.

One analyst said: "Genting has not build up major shareholdings in London Clubs and Stanley Leisure to just sit there and do nothing." He believes that once a marriage has been arranged, Genting will use the combined company as the vehicle through which it will bid for the new casino licences to be offered by the Government as part of its proposed deregulation of the UK gaming industry.

Meanwhile, Stanley Leisure rose 20p to 656.5p after revealing a pick-up in business at its London casinos. The group had a tough time in the capital over the summer as the terrorist attacks of 7 July badly affected the numbers of tourist betting at its tables. High-spending Saudi gamblers also stayed away after the death of King Fahd in August.

For the second day, investors piled into WH Smith, 16p higher at 397.5p, on rumours of a bid for the retailer from a US private-equity firm. Comments from Lehman Brothers also boosted the shares in Smiths. It argued that the group may turn out to be one of the few winners on the high street this Christmas, along with possibly Marks & Spencer, 6.5p higher to 452.25p, and GUS's Argos chain.

Of the three, M&S is Lehman's favourite in the run-up to Christmas. The broker said: "M&S has already indicated it will not repeat last year's pre-Christmas promotions and that it expects 40 per cent less stock in the new year sale."

JD Group fell 8.25p to 244.25p as investors were surprised to learn that Sports World International, which is owned by the entrepreneur Mike Ashley, had reduced its stake in the company to 15.9 per cent from 19 per cent. Most in the market had expected Mr Ashley to add to his holding and possibly even try to secure a seat on JD's board. Richard Ratner, an analyst at Seymour Pierce, pointed out that Mr Ashley is now showing a loss on the remainder of this stake, which he picked up at 250p. Mr Ashley also controls 9.5 per cent of JJB Sports, 1p higher at 173p. Mr Ratner said he would not be surprised if Mr Ashley also reduced his stake in that company.

EasyJet gained 33.5p to 340p after posting better-than-expected annual results. After the figures were announced, Icelandair is believed to have been busy adding to its stake in the no-frills airline. At the last count, Icelandair's shareholding in the company stood at 16.2 per cent.

In the FTSE 100, Centrica fell 2p to 238.5p amid worries about the continued rise in gas prices. Analysts believe that profits at the company will be hit hard by the trend because the utility will find it difficult to pass on these price rises to customers.

In the world of smaller companies, Advanced Fluid Connections, formerly called Oystertec, ticked 0.5p higher to 5.25p on rumours that the group is close to selling off a number of its businesses. According to gossips, AFC will use the cash to cut its £26m debt pile. KBC Advanced Technologies added 3p to 47.5p after the oil industry consultant unveiled its biggest-ever contract win. The industrial repairs company Dowding & Mills, 1p higher at 17.25p, said it had received a 20p-per-share bid approach.

Altium Securities urged investors to abandon Pace Micro, unchanged at 55p. Shares in the set-top box maker have jumped since last week's takeover of its rival Scientific Atlanta by Cisco Systems. But Altium is sceptical the same fate will befall Pace. The broker said: "We see no good reason why Pace's share price should have bounced on the news that Scientific Atlanta is being acquired by Cisco."

Davenham, which lends money to small and medium-sized businesses, debuted on the Alternative Investment Market. It raised £28m at 254p and its stock closed at 261.5p. Davenham will use the cashed raised to reduce its debt burden and fund growth. New Star Asset Management rose 11.5p to 279.5p on whispers the group is close to securing an £80m mandate from a major institutional investor. Suggestions that trading at Mayborn is running ahead of expectations pushed shares in the household products company 12p higher to 411.5p.

Finally, Celtic Resources dropped 16.5p to 177.5p amid fears the company's shareholding in a key Russia joint venture is about to be diluted by its partner.

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