Market Report: Mugabe anti-foreigner Bill corrodes Aquarius

Traders rarely concern themselves with Zimbabwean politics, but two mining firms were in focus on the London markets after a controversial Bill was passed in Harare.

The Robert Mugabe-driven Bill for locals to seize a majority stake in foreign-owned operations in the country, including mines, sent Aquarius Platinum to the foot of the FTSE 250. The group, which has endured volatile trading all week, fell 7 per cent to 1731p, as one market participant estimated that 15 per cent of its platinum production was in Zimbabwe.

The move opened the door for a resurgence in larger rival Lonmin, another platinum producer that does not operate in Zimbabwe. One trader said: "It has long been rumoured as a takeover target, and this could be the catalyst to out a bidder, especially if they fear it will become expensive." It closed up 4.01 per cent at 131p.

Another stock that sparked discussion was Marks & Spencer. The retailer rose 4.08 per cent at 612.5p on vague bid talk, with traders saying the stock looked cheap. Others quashed the talk, saying the company enjoyed the bump after a dinner with analysts on Wednesday night.

The banks led the market up, with Alliance & Leicester the pick of the stocks, 8.46 per cent higher to 795p at the close. Fears over a potential Northern Rock II have eased, with UBS reiterating its "buy" recommendation, saying it remains "unusually cheap".

Northern Rock itself shrugged off the doom and gloom from Collins Stewart – which downgraded the stock to "high-risk sell" and slashed the target price – to close 6.32 per cent stronger at 193.5p. The Newcastle lender was buoyed by news it had opened its books to private equity companies JC Flowers and Cerberus Capital.

Despite rumours it had guided lower while on a roadshow, HBOS was another stellar performer after the previous day's backing from Goldman. It closed up 43p at 916p.

The strong financials, as well as resurgent housebuilders – the pick was Taylor Wimpey, up 6.59 per cent to 275p – drove the FTSE 100 up for the second day in a row. It closed 53.4 points firmer at 6486.4.

One of the worst blue-chip performers was Resolution on reports that a bid from Pearl Group would be launched at a discount to its share price. The stock gave up 1.51 per cent at 684.5p on talk of the 660p-per-share bid, which values the company at £4.5bn.

At the foot of the table was Compass Group, an outcome that had the market scratching its head. The catering group fell 2.97 per cent to 310.75 despite bullish numbers. One trader said the fall was caused by Cazenove downgrading its 2008 estimates, or by participants adjusting their portfolios. He added: "It is the end of the quarter on Friday, and traders often use this as an opportunity to rejig their holdings."

The gambling group Partygaming continued to perform strongly and topped the mid tier by the end of the day. The 7.41 per cent bump to 29 took a high for a month and a half.

At the other end, Wood Group, the energy service company, was heavily sold after a downbeat note from UBS. The Swiss broker downgraded Wood to "neutral," saying it was trading at a 28 per cent premium. It also poured cold water on the takeover talk sparked by General Electric's takeover of Sondex this month. "Finding credible bidders for a business as large as Wood Group is challenging," UBS said. The stock slumped 5.72 per cent to 399.75p.

The shipwreck salvage group Subsea Resources rallied after a dog of a week in which it announced that full-year losses had widened and it admitted to lacking cash to operate for 12 months. It clawed back 60 per cent of its value to 1p after RAB Special Situations Master Fund raised its stake to 29.7 per cent. "RAB is long from higher up, and at these prices it is just option money," said one trader.

Jessops performed strongly after it announced that restructuring was on track. Panmure Gordon said the statement "should improve sentiment on a stock most have given up for dead". The departure of chief executive Chris Langley just weeks after the finance director resigned failed to overshadow the group, and it closed up 40 per cent at 12.25p.

Stronger-than-expected results bolstered Lamprell, which provides services to the oil and gas industry; it closed up 28.25p to 408.25p. Blue-blooded broker Cazenove said: "We are more bullish than ever about the growth profile over the next three years."

The biggest AIM losers' table was littered with victims of poor results statements. The worst affected was Superscape Group, a mobile game publisher, which fell 25 per cent to 4.85p despite losses narrowing. The worst performer of the day was Autologic Holdings, which crashed almost a third to 50p after it lost a contract with Ford.