In often busy trading, Lucas motored 34.5p, ending 25.5p higher at 233.5p, the best ever closing level.
The proposed link with the US group, Varity, created the excitement. Although the signs from the two were that some form of trading pact was being considered, the market took the view the talks signalled an attempt by Lucas to flush out any potential bidder.
It is seen as vulnerable following the pending departure of George Simpson, who steps down as chief executive in the autumn to move to the GEC giant.
Initially the US talks are aimed at forging a link between the Lucas and Varity car brake divisions. But there must be a possibility that they could be stretched further and result in a full merger. Varity is too small to buy Lucas and the pounds 1.5bn the UK group would have to find for the Americans could stretch its resources, although the sale of its aerospace division could help bridge the gap.
The Varity talks are being read as indicating that Lucas is now in play and it realises it lacks the necessary clout to be a major player in the world league. So a strategic alliance, possibly a full merger, looks more likely.
The US talks presumably mean that Lucas has given up on one its possible moves, its bid to buy a 30 per cent interest in Valeo, the French car components group. The stake has been put on the market by former Italian PM Carlo de Benedetti. Lucas was known to be interested and was sounding out the possibility of taking full control.
The car components group's display was in sharp contrast to most of the market, with the FT-SE 100 index off 28.6 points to 3,723, although the supporting FT-SE 250 index managed to return to winning ways with a 10.2 gain to 4,525.5.
Although many followers believe there is a good chance of an interest rate cut this month the continuing political uncertainty and another New York downturn inhibited sentiment.
The market has certainly experienced the takeover action many said would provoke an upsurge. Last week's insurance merger was followed by the expected US bid for Midlands Electricity and on a much smaller level Stanley Leisure, the bookie, said it was talking to quoted rival Gus Carter.
Midlands gained 10p to 433p on what is a generous bid; PowerGen, sitting on 21 per cent of Midlands but prevented from bidding by the Government, fell 8p to 549p.
National Grid was busily traded with a 32.8 million turnover printed, indicating, perhaps, that James Capel had got rid of some of the controversial shareholding it acquired last week. The price held at 198.5p.
The 11.5 per cent interest came from Hanson but its Middle Eastern ramifications prompted questions to be asked about the beneficial ownership.
The possibility that the remaining regionals will be picked off lifted them a few pence.
Manchester Utd greeted its Premiership triumph with a churlish 17p fall to 356p; Millwall's relegation left the shares 0.5p off at 2p. The shares were once more than 20p.
Harry Ramsden's, the fish and chip restaurant chain, continued its heady progress, climbing 53p to a 437p peak. The shares have risen 111p in a week. Whitbread, year's figures today, Rank Organisation and First Leisure are the leading names in the bid frame.
British Petroleum was uninspired by the strong oil price and encouraging results, falling 13p to 569p, and British Borneo, after a strong run, succumbed to profit taking, off 18p at 555p.
Ahead of a crucial presentation, British Biotech topped pounds 30, reaching 3,025p with a 77p gain. Chiroscience, with an pounds 11.6m loss, and a pounds 40.3m rights issue, gained 45p to 500p.
Steel Burrill Jones, the insurance broker, edged forward 2p to 47p as rumours surfaced that one of the bigger names in the industry would take advantage of the depressed price and mount a bid. The shares were 112p last August.
Strategem, the mini conglomerate, slumped 36p to 127p on disappointing profits and Hay & Robertson added 4p to 54p following its rugby deal.
Albrighton, the aggregates group, tumbled 4.5p to 7.5p. It is making a rescue cash call at 6p, raising approaching pounds 2m.
Clifton Financial Associates, run by Stephen Barclay, is bringing its sixth company to market - Premiere Group, which is raising pounds 2.7m through the issue of shares at 133p. Dealings start on Monday. The company, with 19 employment agencies, was born out of Burns-Anderson, the services group once headed by famed trouble shooter Sir John Harvey-Jones. BA went into receivership and Robert Durston and Dorian Marks, Premiere's managing directors, acquired 15 of its recruitment branches.
rPan Andean, the Bolivian wonder share, fell 8p to 88p. An independent report on its oil developments by an industry researcher is thought to suggest that the part of the Charpare block so far examined could suggest a yield of 750 million barrels of recoverable oil.