After hitting an all-time high of 4024.3 in early trade, the Footsie took its cue from a weak opening on Wall Street to close bang on the 4000 mark, 15.1 points down on the day.
Even so, the successful debuts yesterday of four newcomers suggested the fundamental characteristics of a bull market remain in place.
Ultra Electronics raced to 286.5p, well ahead of its 250p placing price; Oriental Restaurant Group ended at 188.5p, versus its 154p offer price; Airtech, available at 68p, closed at 75.5p, while Interoute Telecom advanced to 174.5p from 150p on its first day.
Bid rumours dominated the session. Imperial Tobacco, spun off from Hanson three days ago, was again in demand as a hefty 18 million shares changed hands, making it the second most actively traded blue chip.
Imperial's shares came off early highs after the expected "dawn raid" failed to materialise. BAT Industries is the suggested suitor but Imperial's finance director Robert Dyrbus poured cold water on the idea, attributing recent share price strength to strong interest from US investors, where 30 per cent of the stock is held.
As high as 429p at one stage, Imperial closed a net 13p firmer at 417p, while BAT ended 10p lower at 427p.
Enterprise Oil was another a lively trade. The shares were on offer at 600p, a six-year high, in early exchanges amid rumours that Italy's state controlled energy group ENI was poised to swoop. Analysts said ENI was rumoured to be considering a bid for the company at 750p per share, valuing Enterprise at pounds 3.7bn. ENI, so the argument went, was one of the few European oil companies that could afford Enterprise. It also wants to build up its Agip business and have a greater presence in the North Sea, where ENI is not currently strong.
However, Enterprise's shares retreated to close just 3.5p ahead at 574.5p after ENI was quoted as saying if it had anything to say it should have been said in a recently published privatisation prospectus. A second tranche ofENI is due to be floated at the end of the month.
Oil stocks have been strong performers on the back of firm Brent crude prices and persistent US buying, though profit-taking yesterday saw Shell dip 6p to 991.5p on cautious comment from BZW and BP relinquish 8.5p to 677p.
Shares in PizzaExpress closed at a record high of 491.5p, up 9p on the day. The company is in late-stage talks to buy out 32 of its 36 franchised stores for about pounds 25m. A deal is expected to be announced in the next two to three weeks. US investors, who speak for a quarter of the shares , continue to buy on the back of strong profits growth and hopes that a bid might materialise from a leisure giant such Bass or Whitbread.
Mercury Asset Management rose 24.5p to 1052p on a reiterated buy recommendation from SBC Warburg. Other fund managers joined in the fun with Perpetual up 70p to 2342.p and M&G gaining 12.5p to 1097.5p. The sector is said to be gaining from record equity levels and from the fall-out of recent high-profile scandals involving rivals such as Morgan Grenfell, Newton and Jardine Fleming.
P&O steamed ahead 20p to 645p in the wake of its cross-Channel ferry merger with Stena, while Rank was the best performing Footsie stock, rising 14.5p to 441p on its Hard Rock casino venture with US entrepreneur Donald Trump.
British Gas led the laggards. Analysts said the shares, down 6.5p to 193p, were effectively "dead money" now that the dispute with industry regulator Ofgas over pricing proposals for the TransCo pipeline business would persist for at least another six months.
Also in the doghouse were Redland, down 5p at 456.5p and RMC, off 6.5p at 1182.5p, after SBC Warburg made cautious noises about the state of the German construction market.
A profits warning from its Australian subsidiary sent ICI 20.5p lower at 855p. Virtuality's shares plunged 32 per cent to 140p after saying first-half losses had widened to pounds 3.78. The news hit shares in other virtual reality groups with Division diving 3p to 67.5p and Videologic shedding 4p to 57p, though Superscape VR managed a 7.5p gain to 457.5p.
Shares in Inspirations crashed 48p to 86.5p after the package tour operator indicated it would take a one-off charge this year to cover maintenance delays at its New Caledonian charter airline.Reuse content