One securities house was said to be telling its clients to buy the shares because it felt that GEC, which is known to have looked at BAe, had decided to prepare a bid.
BAe clashed with GEC earlier this year when they descended on the ship builder, VSEL. Then, there was a stock market feeling that should BAe emerge victorious, GEC would bide its time before bidding for the combined group.
In the event, GEC won the battle but it is doubtful if the VSEL deal will satisfy the ambitions of its chief executive, Lord Weinstock, who, according to market mythology, sees BAe as the crowing bid of his long career.
The aerospace group's 30 per cent investment in Hutchison Telecom, the rapidly growing Orange mobile telephone business, also created speculation. There was talk HT would be floated soon with BAe cashing in its interest.
BAe shares rose 14p to 650p and GEC shaded 2.5p to 311p.
The rest of the stock market managed a modest advance, largely on the back of a firm New York display. But trading, ahead of the bank holiday, was, not surprisingly, undemanding.
Bid speculation was evident among financials with Schroders jumping 53p to 1,463 and the non-voters 77p to 1,165p. The market talked of a 2,000p offer, with US investment house Merrill Lynch, which has just swallowed Smith New Court, the popular choice.
Mercury Asset Management and Perpetual also edged ahead but Edinburgh bank Quayle Munro continued to weaken, down 8p to 137p.
Invesco, the fund manager, fell 8p to 219p as Lehman Brothers offered 60 million shares at 218p to US investors. The shares, representing 24.9 per cent, came from Peregrine Investments, a Hong Kong group.
Utilities ended the week on a firm note with electricities pushing ahead after the agreed higher bid for Sweb from the US Southern Co.
Through SCB Warburg the Americans moved into the market, buying 17.27 million shares to lift their stake to 29.9 per cent.
Like Hanson's agreed offer for Eastern and Scottish Power's contested bid for Manweb, the proposed Sweb deal has still to win Whitehall approval. But many in the market believe the deals will be cleared, opening the way for intense action with outsiders, from this country and overseas, attempting to barge in and the besieged electricities trying to indulge in defensive mergers. Sweb gained 39p to 951p.
Thorn EMI added 22p to 1,494p on demerger hopes and rumoured comment from Kleinwort Benson that the shares were worth 1,700p. Ladbroke lost a further 4p to 167p with National Lottery worries and talk of a bid for London Clubs ruffling the shares. BT rose 7p to 408p as its industry regulator backed its pricing policy.
BTR was busily traded; more than 25 million shares were printed, with Salomon Brothers again accounting for much of the action.
Zeneca fell 20p to 1,133p, depressed by the lack of interest displayed by Roche.
Builders, as the housebuilding gloom continued to deepen, fell with Beazer off 6p at 141p.
John Menzies, the newsagent, rose 26p to 635p as a smattering of agency crosses went through at 645p. Kingfisher fell 7p to 468p with Cazenove said to be negative.
Takeover speculation returned to haunt Carrs Milling, up 17p to 295p, and Bridgend, the wholesaler, rose 3p to 18p with some talking of assets of 38p a share.
Hanover International, the hotel group where Bridgend has a 47 per cent interest, gained 8p to 133p.
GM Firth, the metals group, was busily traded as a big shareholder sold with institutional shareholders picking up the stock. The price rose 1.5p to 31p. Upton & Southern, the department store group, rose 0.5p to 3.25p. The shares have doubled this week in response to a restructuring exercise.
Ivernia West rose 9p to 68p on talk Minorco, with 24.5 per cent, planned to take full control. Minorco and Ivernia jointly own the Lisheen zinc/lead deposit in Tipperary.
Newcomer Consolidated Coal, which raised pounds 3.5m to develop mines in Wales and a coal processing facility, traded up to 53p against a 50p placing price.
Enviromed, the healthcare group, fell 4p to 35p as former chief Peter Townsend trimmed his shareholding through Charles Stanley. The struggling group is in bid talks.
Baldwin, the leisure group, announced a higher interim dividend and dismissed rumours of shareholder unrest. Flextech, the television group, put on 14p to 436p, reflecting a 4 million agency cross at 433p.