While the City has long considered UB vulnerable to a bid, the rumours flared up late on Friday and have since gained further ground.
Some traders are convinced that Cadbury has held exploratory talks with the Scottish group over a possible agreed offer at about 500p a share. But UB, which yesterday completed the pounds 220m sale of its Terry's sweets business to Kraft Foods, is believed to be holding out for 650p. If no agreement is reached, Cadbury could launch a hostile bid within weeks, they said. The two are considered too small to compete on their own against food giants such as Nestle and Philip Morris.
But UB shares surged ahead 29p to 428p with more than 8 million changing hands. Cadbury eased back 8p to 471p.
The rest of the market was in sombre mood despite an official end to the recession. Although trading volume at 492 million shares was moderate share prices were again sent sharply lower by bears operating in the futures market.
Word is that George Soros, the legendary Bahamas-based investor, was one of big sellers of the Footsie futures contracts.
Mr Soros, who played a key part in forcing sterling out of the ERM last September, has also turned a gold bull, acquiring a 13 per cent stake in Newmont, the US gold mining company controlled by Sir James Goldsmith, for pounds 260m. Dealers believe he may aiming for a 'double whammy' profit by forcing equities lower and buying gold.
News of his Newmont purchase and a firming gold price led to keen demand for mining stocks. RTZ Corporation, the mining giant, gained 3p to 652p. The shares, which were hit earlier this year by a weak copper price, are being recommended by Barclays de Zoete Wedd. Cluff Resources, which owns substantial African gold mining interests, soared 5.5p to 19p. Lonrho, the trading and mining group run by Tiny Rowland, added 4p to 88.5p.
However, another sharp rise in sterling prompted further selling in big dollar earners. British Petroleum, the oil group, slipped 6p to 293.5p on aggressive selling by Panmure Gordon.
At the same time, American investors' love affair with BP appears to have cooled. Some US institutions are thought to be reducing their holdings after BP's recent outperformance against the market.
Shell was 5p off at 564p due to growing concern over slackening demand for oil and petrochemicals in Continental Europe.
The pharmaceutical sector was also in retreat. Boots, the chemist, slumped 29p to 364p after it disclosed an adverse research finding about its heart drug, Manoplax. Preliminary results of the study show that patients receiving high dosage of the drug have a higher risk of death than those not receiving it.
A surprise top-level reshuffle at SmithKline Beecham, the healthcare group, led to a 3p drop in the 'A' shares to 446p. The company said Henry Wendt and Bob Bauman, chairman and chief executive, would retire next April. They will be succeeded by Sir Peter Walters, former head of Midland Bank, and Jan Leschly, currently in charge of SmithKline's pharmaceutical arm.
ICI, the chemicals group that is hiving off its pharmaceuticals arm, lost 20p to 1237p as the market became nervous about the weakening dollar's impact on its profits.
Guinness, the drinks multinational, was 3p off at 474p. The group is thought to be in discussions to acquire a 51 per cent stake in Desnoes & Geddes, Jamaica's largest company, which owns the Red Stripe lager brand.
Kwik Save, the discount food chain, raced ahead 18p to 786p. the company is due to report interim results this week.
Renewed selling of futures contracts and a strengthening pound forced blue chips lower. The FT-SE 100 index shed 21.5 points to 2,822.3. Second-line shares fared better. Trading volume was moderate at 492 million shares. The account ends on 7 May and settlement is on 17 May.
The strong rise in car sales since December is attracting motor dealers to the market. There is talk that Dixons Motors, the Midlands company, is planning to join the market in the next few weeks. The flotation, probably via a share placing, is being sponsored by Allied Provincial, the regional broker, and could value Dixons at about pounds 15m. The broker is actively marketing the issue to institutions.
Hangovers don't last forever, quipped Nikko Securities in a keynote review of the brewing sector yesterday. Patrick Kirby, brewery analyst, says that the sector's underperformance against the market is coming to an end. He picks Allied-Lyons and Bass as the strongest beneficiaries, as they have a high exposure to the UK economy. Allied-Lyons closed 1p higher at 581p; Bass was unchanged at 548p.
Crossroads Oil jumped 2.5p to 15p after the oil tiddler announced a share subscription at 20p a share by a UK-based oil investor. A complex cross-shareholding arrangement means that the Adair family, which controls Anglo-Texan oil partnership Melrose Petroleum, could take a 29.9 per cent stake in Crossroads. The move will inject dollars 2m cash enabling it to take advantage of higher US gas prices.