Footsie surges as takeover optimists return in force

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Shares enjoyed their best day for a month, inspired by a strong New York, a revival of takeover speculation and National Power's decision to reward Sid and his mates. The FT-SE index jumped 36 points to 3,789.6 in often brisk trading for what started as a typically mundane Friday session.

NP was the day's outstanding performer, jumping 31p (after 39p) to 547p. The stock market was captivated by its 100p-a-share special dividend and increase in its basic payout from 15.45p a share to 23p.

The decision to spread the cash pile follows the Government's veto on its bid to move into electricity distribution. It contrasts sharply with PowerGen's action which put most of its surplus cash in the hands of institutions by undertaking a share buy-back.

There is no doubt the special dividend is, in every sense, a much more balanced way of distributing unwanted cash and it is surprising so many companies concentrate on rewarding the elite (and, of course, powerful) institutional shareholders at the expense of private investors, like the Sids who have backed the Government's privatisations.

NP's enlightened approach came as the controversial Railtrack privatisation seemed to be on the right lines, thanks to the small investor. The public offer was three times oversubscribed and Monday's opening price should be around 390p, pricing the company at almost pounds 2bn.

Takeover speculation centred on Bank of Scotland, Lucas Industries and the wannabe insurance giants, Royal and Sun Alliance.

BoS added 14.5p to 271p following the sudden resignation of its chief, Sir Bruce Pattullo from the board of Standard Life which has put its 32.2 per cent interest in the bank up for sale. His departure is seen in some quarters as heralding a quick deal which could prompt a bid.

Lucas has been remorselessly in the bid spotlight since its talks with Varity, the US car parts business, became public knowledge. The shares gained 7p to 239p in another round of heavy trading. The Varity deal is near but the market hope is that soon after it is announced a predator will emerge for the aerospace and car components group.

Royal, planning a merger with Sun, gained 12p to 450p and its would-be partner added 15p to 429p. The theory is one of the Continental giants will disturb the comfortable deal the two have arranged.

Royal Bank of Scotland, up 21p to 552p, and Standard Chartered, 23p to 640p, also enjoyed takeover speculation.

Next, the retailer, gained 12p to 543p after an upbeat trading statement prompted analysts to upgrade forecasts to around pounds 150m for this year against last time's pounds 125.3m.

Elys, the Wimbledon department store, was 620p after hostile bidder Panther Securities dropped its bid, leaving the way clear for Morley's Stores. Allders fell 14p to 226p following the sale of its duty-free operation to BAA for pounds 130m.

Glaxo Wellcome was strong again, up 17.5p to 854p. An increased loss from Celsis International left the shares a shade lower at 129p. Ahead of Tuesday's crucial presentation on its cancer drug British Biotech gained 45p to 2,845p.

British Airways, rumoured to be near to clinching a deal with American Airlines, climbed 19p to 558p. One idea is that the two will create the world's biggest aviation alliance by forging a trading pact and taking share stakes in each other.

British Gas experienced more heavy trading with Seaq putting turnover at 93 million; the price gained 3p to 177.5p.

Among waters Brockhampton was unchanged at 202p as East Surrey, a water group, snapped up 14.4 per cent of the voting shares and 34.8 per cent of the non-voters. It said it had no present intention of bidding.

Orb Estates languished at 69p, off 4p, as Quintain, a privately owned property group, failed to agree terms for a reverse takeover and Prior, rumoured to be in talks with Jermyn Investments gained 16p to 126p after the Prior family sold, just before the market closed, its 26.8 per cent stake to a Swedish property group, Fermenta at 157.5p a share.

Appleyard, the garage chain, gained 4p to 112p and Glenchewton, adding to its pubs portfolio, was little changed at 57.5p.

Luminar, a night club group, is expected to achieve a rousing debut when dealings start on Monday. The shares were placed at 220p; an opening price of around 240p seems likely.

Innovative Technologies, a medical dressings group, jumped 18p to 166p, responding to an agency cross of 100,000 shares at 158p.