Directors from Tesco were yesterday locked in meetings with merchant banking advisers. The market expects Tesco to raise the stakes to 350p, and duly lifted Low's shares another 17p to 340p.
More than 1.6 million shares went through the books, some said to have come from institutions cashing-in on the speculation. Tesco advanced 5p to 236.5p and Sainsbury added 4.5p to 412p.
A fresh offer of 350p from Tesco, though, may not be enough to deter Sainsbury. There was talk it would remain interested all the way to 400p. Many dealers are braced for Tesco to pounce today, although sources said it would probably not move until later this week.
NatWest Securities believes Tesco is being pushed into a no- win situation: bidding away the earnings enhancement potential, in which Sainsbury holds an advantage, or simply losing to its main rival.
Rubbing salt into the wound, NatWest said at the current price for Low it would hold Sainsbury shares but would be less inclined to add to Tesco holdings.
William Morrison supermarkets, now sporting a bid label because of the fight for Low, touched 142p before closing unchanged at 139p. Nearly 1 million shares were traded.
The takeover gossip tanks were also topped up in late trading, with speculation that BAT Industries was lining up a deal. Shares in BAT, a prime constituent of the FT-SE 100 index, gained 5p to 447.5p.
A hefty 30 million shares were traded and a chunky 9,500 option contracts - often a reliable indicator of something lurking in the wings - were dealt.
One possibility is that the company will soon receive a favourable ruling by the Federal Trade Commission for its planned dollars 1bn takeover of American Tobacco, a move that would take its market share of the US cigarette market from 11 to 18 per cent.
Another possibility could involve a deal to take a minority stake in Seita, the French state- owned maker of the Gauloises and Gitanes cigarette brands. BAT had wanted to take a controlling stake, but the French government was keen that Seita remained independent after privatisation.
Generally, dealers behaved in a more orderly fashion, although fears remained about a possible rise in interest rates. A repeat of Friday's lemming-like rush for the door cannot yet be ruled out.
Analysts at SG Warburg warned that the situation would only get worse until rates were raised. 'An increase in the next few days is clearly possible and by far the most desirable route.'
Share prices opened slightly easier and gradually moved into positive territory in the absence of an expected, and much feared, increase in interest rates.
The FT-SE 100 share index, off 7 points immediately after the bell, came close to reclaiming the 3,100 mark with a 14.8 rise to 3,097.4. Equity trading totalled 545 million shares.
More attention than usual will be commanded today by the publication of the Bank of England quarterly report on the outlook for inflation. A rising oil price is also helping to keep nerve ends frayed. A further breakdown in talks over the Nigerian oil crisis pushed the price through dollars 19 a barrel.
Shell, which produces half of Nigeria's oil output, rose 7p to 737p. Burmah added 6p to 861p.
Enterprise Oil, under institutional pressure to split the roles of chairman and chief executive, firmed 2p to 430p. Lasmo, which it recently failed to buy, did better with a 4p gain to 151p on the back of a buy recommendation from Yamaichi.
The securities house said the recovery that had started at Lasmo before Enterprise made its bid was likely to accelerate over the coming months with management under pressure to perform.
A pounds 3.7m cheque for land near Heathrow airport being sold by Norman Hay, the electro-plating group chaired by the well-known Roger Seelig, has disappeared off the radar screen. The cheque from Orcadian International was scheduled to arrive on Friday. Hay, which saw its shares drop 5p to 30p yesterday, has served notice on Orcadian giving it 10 days to complete the contract.
The Chamberlain Phipps name is returning to the market two years after the company was spun out of Evode for pounds 12m. Evode, now part of Laporte, scrapped with Bowater Industries for Chamberlain in 1989, eventually winning with a pounds 90m bid. Chamberlain, maker of shoe materials, is expected to publish its prospectus tommorow and to be valued at around pounds 70m.
Brandon Hire moved up smartly from 62p to 66p on the back of a reinstatement of final dividends and a promised intention to lift payouts by at least the rate of inflation. The final of 1.5p is uncovered by earnings of 0.63p although Brandon, a tool-hire company, said it was moving forward and hinted it was close to an acquisition. Its shares are moving from the USM to the full list.Reuse content