The sudden excitement could mean nothing - or everything. The market has for long been on bid alert for more insurance action and even a little, unexplained trading of the type which occurred in L&G was enough to get some observers speculating about possible corporate activity.
Continental groups are seen as contenders for British insurers. There have also been alliances to build the strength of domestic groups in the event of hostile foreign strikes.
The merger which created Royal & Sun Alliance was seen as a defensive manoeuvre; so was the Refuge and United Friendly get-together which produced United Assurance.
In recent months BAT Industries has been linked with a number of insurance groups. And National Westminster Bank has been seen as a candidate to bid for L&G.
The BAT story is based on the premise that the financial and tobacco giant is planning a break-up, a possibility which has yet to attract any support from the group.
The idea is that BAT's financial side, largely consisting of Eagle Star and Allied Dunbar, should be beefed up by the addition of an insurance major ahead of being demerged from the tobacco business. The tobacco side would, runs the argument, then take over the Imperial Group, recently demerged from Hanson.
Besides insurance speculation there is a distinct feeling that more corporate activity is due to break out in the rest of the financial sector this year.
NatWest, up 9.5p to 706p, is receiving some support from analysts. Last week Credit Lyonnais Laing offered encouragement and yesterday it was the turn of Panmure Gordon which lifted its profit forecasts to reflect consumer borrowing.
The market recovered from the long festive session with turnover at 682.5 million shares. The steady flow of new year tips helped create interest. Footsie, with New York romping above 6,600 points during London hours, ended 17 points higher at 4,106.5.
Shares were restrained by the continuing difficulties of John Major and the impact sterling's rampant display is having on exports.
British Gas rose 4p to 225p despite a 200p target price from Merrill Lynch and sell advise from Societe Generale Strauss Turnbull. Franklyn, a US investment fund, could be responsible for the strength; it notified a stake of just over 3 per cent, worth more than pounds 300m.
Properties had a strong run on increasingly bullish forecasts about the prospects for the commercial and residential markets this year.
There were suggestions a more buoyant market could encourage takeover activity such as MEPC, up 13p to 450p, bidding for Slough Estates, 4p to the good at 282p.
Retailers ahead of expected festive trading updates in the next few weeks, were firm. WH Smith, where vague take-over speculation flutters, rose 11p to 467.5p. But Laura Ashley, weak recently, fell a further 9p to 157.5p as Merrill Lynch took the shares from its buy list.
Hillsdown Holding, the food group, seeing analysts, fell 6p to 190p and health care group Smith & Nephew, arrested recent weakness, with a 3.75p gain to 181.75p following an analysts' briefing.
BTR's strong run came to a grinding halt, off 9p to 268.5p, as NatWest Securities pointed to the scope to take profits.
GB Railways made the expected full-steam debut, ending at 210.5p from a 100p placing. The shares topped 230p at one time. Azlan, the computer group, went into the history books with what must be one of the biggest rights issue flops.
Its pounds 48.5m cash call produced a mere 0.56 per cent take-up, leaving underwriters with the rest. SBC Warburg, lead underwriter, is left with 6.26 per cent, which is likely to be sold. The rights was at 620p. Xavier Computer returned to market at 12p against an 11p suspension.
Thomas Jourdan shaded to 31p as David Abell, ex-Suter, ruled out any bid intention.
Frank Usher, a clothing group, put on 8p to 176p. Nigel Wray took time off from building his sports empire by increasing his stake to 5.87 per cent. Celtic scored again and on Ofex Rangers jumped 115p to 650p. The two Glasgow clubs were helped by suggestions they could join the Preimiership.
r Grand Metropolitan achieved the best gain - a 77.5 per cent advance by a preference share carrying a 5 per cent coupon.
They closed at 98.5p after the food and drink giant announced it intended to repay at 100p its three preference shares. The buy-in will cost Grandmet around pounds 12.2m. Its ordinary shares failed to join the fun, falling 10p to 449.5p.
r AromaScan, making electric "noses" for gas and odour detection, is in the red but Credit Lyonnais Laing thinks the shares are a buy. The company is expected to suffer a pounds 2m deficit this year. CLL say although AromaScan seems to be far away from generating profits the management appears to be doing "all the right things" for long-term profitability. The shares rose 8p to 87p.Reuse content