The shares, in brisk rather than busy trading, climbed 30p to 484p with Abbey National's not entirely unexpected swoop on First National Finance Corporation providing the latest incentive.
Rothschild, the merchant bank, sits on 20.1 per cent of Smith and the popular view is it would be happy to sell. Schroders, the investment group which needs to strengthen its limited securities operations, is the obvious predator.
But the German Commerzbank, which grabbed control of Jupiter Tyndall, the fund manager, has emerged as the market's favourite to strike.
Some feel Schroders and Smith would not be a comfortable fit. Perhaps Schroders could satisfy its need for a bigger share dealing role by moving in on Cazenove which could feel the need to join with a bigger group in the more volatile climate which has engulfed the industry..
Smith has looked increasingly vulnerable since announcing last month a profit slump from pounds 95.2m to pounds 31.2m. It has also indulged in the prevalent City practice of sacking staff. And Abbey Life, one of the country's largest life funds, has curtailed dealing with Smith until the end of the year because of the securities house's involvement in the disastrous flotation of Aerostructures Hamble.
Speculation about activity in the financial world has been running high in recent months, fuelled by the fall of SG Warburg, once regarded as London's premier securities house, to Swiss Bank Corporation this year and Commerzbank's move on Jupiter. Then came Kleinwort Benson's pounds 1bn agreed bid from Dresdner Bank. Now FNFC, once tottering on the brink of disaster and rescued by a Bank of England life boat, has accepted a pounds 285m offer from Abbey, seeking more unsecured loan exposure. FNFC, where a big seller is said to have tried unsuccessfully to unload stock recently, rose 18.5p to 108.5p.
With London regarded as Europe's financial centre the remaining opportunities for overseas groups needing to achieve a quick presence in the square mile are becoming increasingly rare.
The rest of the stock market, ahead of the result of the Tory showdown, was in ebullient form with many betting - correctly - on a decisive Major victory. The FT-SE 100 index ended 25.5 points higher at 3,349.2. Significantly utilities were strong ahead of the result with electricities, helped by the added prospect of a soft Littlechild review on Friday, leading the way.
BT, with the prospect of freedom on line rental charges, advance 7p to 396.5p. It is suggested that the industry regulator, Don Cruickshank, is prepared to sanction such a development when he makes recommendations later this month.
Scottish & Newcastle, on hopes of a Courage clearance, jumped 15p to 573, pulling other brewers higher.
Supermarkets were firm, with UBS offering support. Argyll gained 5p to 338p; Asda 1.5p to 96.5p, J Sainsbury 9p to 451p and Tesco 9p to 298.5p. Dalgety, confirming the sale of Golden Wonder pot noodles to CPC, rose 4p to 445p.
The British Gas headquarters shake-up lifted the shares 6.5p to 295p. Arjo Wiggins Appleton, up 10p to 274p, continued to enjoy Panmure Gordon support.
Profit caution from Domestic & General, the insurance group, left the shares 155p lower at 1,115p. Worries about property prospects lowered P&O 12p to 571p and Smith New Court unease over RMC left the shares a shade lighter at 1,053p. The housing gloom hit George Wimpey, off 4p at 110p, and Tarmac, 3.5p at 109p. Vodafone was caught by a negative Kleinwort Benson approach, off 3p at 230.5p.
Metro Radio gained another 24p to 513p on expected bid action but Yorkshire- Tyne Tees slipped 11p to 586p following the sales link with Granada, up 10p at 625p.
Medeva continued to express doubts about the signalled Fisons take over bid, falling a further 5p to 237p.
Merchant Retail, a department store and supermarket group, added 1.25p to 17.25p on hopes of reorganisation details, and Wellington, a chemical group, firmed to 200p following the sale of a Manchester rubber operation. Profit forecasts for this year have been lifted to around pounds 4.9m.
Welpac, the loss making do-it-yourself supplier held at 6p. Its results are overdue and the delay is thought to be hindering the proposed take over bid. Any offer, however, will be below the market price. Some talk in terms of 4p a share.