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Market Report: Pundits prepare for fierce takeover battle at T&N

The stock market is convinced the T&N vehicle components group will soon become the subject of a fierce takeover battle.

Last week the American Federal-Mogul group produced a surprise 235p a share offer. Although derided as inadequate the bid represented a two- year high for the shares of the asbestos haunted group.

Since the offer materialised Federal-Mogul has been under intense pressure to increase its terms. Many institutions feel any strike should be nearer 300p.

Whether the Americans will be tempted remains to be seen. But it is clear a number of domestic groups, including GKN, are wondering whether to enter the arena.

Since Federal-Mogul appeared GKN shares have fallen 66p in a generally strong market as worries about its possible involvement have surfaced. TI is another which could nurse ambitions.

T&N shares added 3p to 249.5p in brisk trading.

The other big takeover speculation occupying the market was concentrated on financials. There was a growing conviction the old yarn that Barclays, the banking group, planned to move out of the securities industry by selling BZW was at last ringing true.

Barclays shares, even by the amazing standards of recent days, have had an astonishing run. They climbed a further 25.5p (after 78.5p) to 1,747p as the market latched on to stories BZW was about to be sold to ING, the former Dutch post office which took over the collapsed Barings bank. ING refused to comment.

National Westminster Bank, up 33.5p to 986p, was also strong on renewed talk it too was near to selling its securities business. Another Dutch group, ABN Amro, the bank owning the Hoare Govett investment group, was the name in the frame. But it denied the rumour - it was "not something we would even contemplate".

Northern Rock in its second day in the rumour ridden banking sector made more headway, adding 13p to 476p.

The rest of the market started off in fine fettle but lost its enthusiasm as the session progress. Footsie was at one time up to a record 5,367.3 points but ended with a 21 decline at 5,291.1. Supporting shares, however, made headway.

Another seeming Government leak, this time relating to the possible removal of Advance Corporation Tax, had provided shares with the excuse for a rousing start. Utilities soared. Thames Water was at one time up 42p. It closed with a 12.5p gain at 896.5p.

Others to be captivated by the ACT trailer included British Energy, up 21.5p to 354.5p; Reuters, 25.5p to 753p and BAT Industries 13p at 567.5p.

BT was again the most actively traded share with Seaq putting volume at more than 56 million. The price rose 17.5p to 459.5p as the market anticipated further cash handouts if, as seems likely, the MCI bid has to be abandoned.

Asda, which failed to take over its superstores rival Safeway, continued to pay for its failed ambition, falling a further 3.25p to 154.25p. Safeway lost 11p to 382p.

Another retailer, WH Smith, put on 16p to 381.5p following the abortive Tim Waterstone approach; JJB Sports, the retailer, lost 6.5p to 466.5p ahead of interim figures next week. The shares touched 531p in the summer.

Bank of Scotland rose 16p to 522,5p as Lehman Brothers suggested a 660p target. Great Universal Stores, an ACT abolition beneficiary, rose 24.5p to 719.5p; it enjoyed the added attraction of an analysts visit scheduled for later this month.

Jeyes, the disinfectant group, rose 12p to 111p and Aggreko, the generator group hived off from Christian Salvesen, added 7p to 178.5p.

It is suggested that Aggreko, in its stand alone form, looks vulnerable to a strike and some of the more aggressive players are circling.

Biocompatibles International's rally was short lived, the shares fell 42.5p to 585p. Shield Diagnostic ended 30p higher at 730p after the investment lunch with stockbroker Sutherlands.

Intelligent Environments, a computer group, rose 6p to 30.5p after it raised pounds 300,000 placing shares with Finsbury Technology Trust at 27p.