Market Report: Marston's rediscovers its fizz amid bid talk

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The Independent Online

Traders found some late bid speculation to toast the market ending in positive territory for the first time in four days, with talk that the pub chain and brewer Greene King was preparing a bid for the rival Marston's.

Talk of consolidation in the pub sector reached fever pitch at the end of 2006 and the start of this year, with Marston's, then known as Wolverhampton & Dudley, favourite to be taken out. Since then, the group's share price has nosedived from 475p to a low of 328p two weeks ago.

Marston's rose 3.14 per cent as the speculation fizzed yesterday, while Greene King strengthened 11p to 881p.

The pacesetter in the morning was Tullow Oil, which rose with the oil prices and news it had sold a 40 per cent stake in an offshore block in Cameroon to the Hungarian oil and gas group MOL Nyrt. The group, recently talked up as a takeover target, was up 3.17 per cent to 668p.

The FTSE 100 was on the rebound and on edge, with little bid speculation to set the pulses racing. It closed up 13.5 points at 6,474.9. One trader said: "In the absence of news, the market will probably trend higher. Everyone is waiting for the next piece of bearish news, which will come."

The miners were back in favour after the previous day's falls, with BHP Billiton closing top of the leaderboard, up 4.41 per cent at 1,775p.

J Sainsbury also returned after a hammering on Monday, in the wake of Delta Two's decision to walk away from a £10.6bn bid. It rose 1.14 per cent to 445p on support from JP Morgan and Dresdner Kleinwort.

The US broker did not expect a new bid to materialise any time soon and backed Morrison Supermarkets as its favourite UK food retail stock as it "looks more likely to gain trading momentum in the near term".

Elsewhere in the sector, Marks & Spencer stormed to second place, after its first-half results beat expectations. The group reported an 11.5 per cent rise in pre-tax profits and plans for a £1bn share buy-back scheme. It closed 3.32 per cent up at 653p.

At the other end, Intercontinental Hotels shed 2.38 per cent to 1,025p after a third-quarter trading update. It slumped as the curse of the "in-line numbers" hit once more. Evolution Securities supported the results with a "buy" recommendation, but lowered its price target from 1,500p to 1,320p.

Another stock looking unpalatable was AB Foods, after it warned of the "large negative effect" on profits from the European Union's sugar reforms. The group was among the worst blue- chips fallers as it also reported an expected 10 per cent rise in pre-tax profit to £613m, falling 2.36 per cent to 890.5p.

Top of the mid-tier was Micro Focus International, soaring as investors piled in following an interim trading update. Panmure Gordon and Evos threw their weight behind the stock, while UBS said the sales figures of $107m (£51.3m) beat forecasts by a fifth. The shares stormed up 21.02 per cent to 344p.

Elsewhere, the London Stock Exchange strengthened 3.01 per cent to 1,710p ahead of its results later this month. Citigroup expects interim profits to rise 40 per cent to £114m with predictions of strong volumes in the second half.

JD Wetherspoon struggled as it reported results of its own, admitting that first-quarter sales had decreased by 1 per cent. It also remained cautious over the outlook for this financial year, following the introduction of the smoking ban in July. The stock shed 3.09 per cent to 486.5p.

The biggest FTSE 250 faller was Bluebay Asset Management, which has been unable to halt its slide from 472p two weeks ago to 400p yesterday.

Outside the FTSE 350, Global Marine Energy was a strong riser as its suitor EMER International Group upped its bid from 13p per share to 16p, which values the company at £11.6m. News sent the mechanical handling specialist up 16.36 per cent to match the new offer price.

Among the top performers was Screen Technologies, which rose 27.27 per cent to 5.25p after it secured a loan that provides it with £500,000 of working capital. It will use the loan to fund existing debt and manufacturing and development costs.

It was a strong first day of dealings for Cryo-Save Group, the adult stem cell storage bank, which rose from its listing price of 210p to close at 228.5p.

Among the highest fallers was Titan Europe, after saying the second half of the year would not be as strong as expected. The steel wheels-and-undercarriages for off-road vehicles group closed down 21.09 per cent at 151.5p.

Today sees the debut on AIM of the property group London & Stamford, which is expected to see some demand, despite issues around UK property. The group, which is being brought to market by KBC Peel Hunt, is expected to have a market cap of about £285m.