Market Report: Warner Music's rumoured designs lift SCi

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The Independent Online

Now that the EU has, for the time being at least, put the skids under any more big mergers in the European music industry, the word in the market is that Warner Music is on the lookout for other publishers. And traders believe that it could be on the verge of making a 625p-per-share bid for SCi Entertainment, the computer game design group behind the highly successful "Tomb Raider" series.

Although the company went through a rough patch last year, September's trading statement was upbeat. The group is planning to release 19 new titles next year and has moved back into a period of strong growth and good profits. Warner Music, which demerged from its parent, Time Warner, last year, is known to be looking for acquisitions, and traders said non-music publishing makes more sense due to lower impact from digital downloading in comparison to the music industry. Shares in SCi closed 12p better at 516p.

London shares were sharply higher, with losers few and far between in the blue-chip index. Talk of a round of merger and acquisition deals boosted the asset management sector.Amvescap led the charge with an 11.5p rise to 601p. Man Group closed 6p firmer at 491p ahead of Thursday's results, and many traders believe the hedge fund management group is a likely bid target.

Although pharmaceutical stocks enjoyed another bounce, all three FTSE 100 representatives will have a nervous week. AstraZeneca, GlaxoSmithKline and Shire Pharmaceuticals all heavily backed Republican party candidates in the mid-term US elections, and a Democrat victory, as is anticipated,is unlikely to be seen as good for the companies. Astra added 26p to 3,216p, Glaxo firmed 14p to 1,416p and Shire closed 6.5p better at 983.5p.

Strong mining and banking stocks helped the FTSE 100 to close 76.4 better at 6224.5, a new closing high for the year, spurred on by a strong opening in New York. By the time London trading was over for the day, the Dow Jones was almost 100 points better.

The newspaper publisher Daily Mail & General Trust was high on the list of mid-cap fallers after the investment bank Morgan Stanley placed 7.5 million shares on behalf of a client in the market at between 653p and 656p. The placing was below Friday's close and the stock ended the session 8.5p worse at 649.5p.

Sticking with institutional ownership changes, the fund management giant Fidelity upped its stake in the music and film retailer HMV Group by buying another 4.9 million shares, taking its total holding up to 29.2 million, 7.3 per cent of the stock. The shares look like they bottomed out at just over 150p in September and chart followers like the look of the graph. The shares climbed 4.25p to 159.25p, among the best performers in the FTSE 250.

Talk that EMI Group's management is about to make an offer to take the group private looks to be gaining momentum. The stock climbed another 11.5p to 281.75p as more than 22 million shares changed hands - almost double the usual volume. The company is due to report to the market tomorrow.

In the small caps, the fashion design group Marchpole won a two-year legal battle against Ozwald Boateng, the Savile Row designer, which was an attempt to prevent Marchpole over selling Boateng-labelled products at a discount retail outlet and the continued presence of Boateng goods at the department store Debenhams. Marchpole won costs but the total amount it will reclaim is not yet known. Shares in Marchpole added 8.5p to 109.5p.

Coe Group succumbed to a bout of profit-taking after an incredible run that had seen the shares rise by more than 350 per cent since the start of September, despite the company saying more than six weeks ago that it knew of no reason behind the rise. The stock is very tightly held, the main reason behind the rally, and yesterday's 7.5p fall to 53.5p was on the back of only 52,130 shares changing hands.

The disaster of the day was Gilat Satcom, an AIM-listed provider of broadband satellite services, which saidit will make a $480,000 (£253,000) third-quarter loss, down from a profit of $1.2m in the corresponding period of 2005. Despite the firm saying the fourth quarter should benefit from deferred orders, the shares tanked 30p to 58.5p.

The information technology group Redstone, a high-flyer during the dotcom boom, has sneaked up to an 18-month high in the last week of trading. The shares were further boosted as the research group Oraca published a bullish note, ticking 0.25p firmer to 7.12p.

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