CU fell 23p to 538p as rumours swirled that it was the only bidder still in the running for the French insurance group, following the withdrawal of the Italian insurer, Generali.
The British group is known to be interested in Victoire, put up for sale by its Suez parent. But suggestions have surfaced that it has trimmed its ambitions and would now be content to buy part of the French company. Even so, a deal is likely to require a rights issue.
Insurance broker Heath dropped 24p to 339p after losing a pounds 22m action in Australia. The Heath setback occurred as some of the cash from the Inchcape acquisition of Hogg was beginning to find its way back into the insurance broking sector. The NatWest contribution was to suggest insurance shares should outperform, but CU and General Accident, down 24p to 567p, should be sold into strength and Sun Alliance, off 5p at 315p, was a buy.
The securities house said of Sun Alliance: 'It is cheap on all valuation measures; it will achieve the highest return on equity in the next three years and it has relatively little exposure to US pollution losses.'
Therest of the stock market tended to drift as most investors sat determinedly on the sidelines. Turnover was a little higher than in recent sessions, but retail activity was low.
Unchanged interest rates in France and Germany came as no surprise, but in the lacklustre atmosphere they were seen as offering yet another excuse for inactivity.
Government stocks continue to influence the fortunes of the equity market and their half- point decline was another bearish factor.
Drug shares perked up a little with Wertheim Schroder, the US investment house 42.5 per cent- owned by the Schroders securities group, making positive noises about Glaxo Holdings and Wellcome. Glaxo ended 4.5p higher at 548.5p and Wellcome 22p up at 574p.
The proposed fivefold US tobacco tax increase lowered BAT Industries 10.5p to 430.5p; but Rothmans, with little US exposure, gained 7p to 387p.
The Cheltenham & Gloucester setback left Lloyds Bank down 5p (after 18p) at 566p. But the judgment helped Abbey National to go 3p better to 431p.
Eurotunnel tumbled 14p to 348p on the fear that road hauliers will switch back to ferries following criticism of the tunnel from the Road Hauliers Association. British Airways rose 7p to 397p on reports from Brussels that the EU was at last going to clamp down on state support for airlines.
Guinness, 1p down at 476p, encountered keen option trading, prompting speculation that LVMH was near to making its signalled 4 per cent sale.
PowerGen rose 11p to 479p following higher profits and a sharp dividend increase; a jump in profits lifted British Land 5p to 389p.
A positive shareholders' meeting added 8p to Saatchi & Saatchi at 141p; the advertising group is thought to be near to winning two contracts worth dollars 60m. MMI held at 30.5p; following the merger with WMGO, stockbroker Beeson Gregory expects profits in the year to February to emerge at pounds 2.2m.
Three shares made their debut. Stockbroker Brewin Dolphin stuck at its 150p issue price; Aerostructure Hamble achieved a tiny premium at 120.5p, and Spargo, a computer group, traded at 108p off a 95p placing.
MFI, the flat-pack furniture chain, fell 4.5p to 153.5p despite bullish noises from Williams de Broe. Analyst Zak Keshavjee expects a re-rating when results for the year to April appear next month. He is looking for a profits jump from pounds 40.2m to pounds 77.5m, with pounds 98m likely this year.
Tate & Lyle fell 4p to 412p on a Kleinwort Benson sell recommendation.
Great Southern, the family- controlled undertaker, surged 133p to 608p on the pounds 87.4m bid from a US group, Service Corporation International.
Exploration Co of Louisiana was hit by impatient US selling, falling 18p to 85p. The company is expected to provide details of its offshore China exploration at the end of the month.
Osborne & Little, the fabric and wallpaper group, gained 47p to 358p on its swing back into the black.
THE FT-SE 100 index retreated 9.3 points to 3,028.9, with the supporting FT-SE 250 index off 1.5 at 3,599.3. Turnover was 683.9 million shares with 23,351 bargains recorded. The account ends on 17 June with settlement on 27 June.
WAVERLEY Mining has discovered a rich seam in Scottish coal mining. It has a 49 per cent interest in the Monktonhall pit, where production should more than double to 2,000 tonnes a day next month. Waverley's assets were last estimated at 70p a share but Monktonhall could be worth another 100p, perhaps much more. More pit moves are likely. Waverley held at 59p.
FIDELITY, the fund management group, has picked up 1.15 million Cairn Energy shares, lifting its holding to 8.91 per cent. Its buying coincides with suggestions from the stockbroker Bell Lawrie White that Cairn's prospects are improving after three years out of favour. BLW forecasts that profits this year will rise from pounds 1.7m to pounds 3m with pounds 5m next. The shares held at 81p.Reuse content