Bradford & Bingley steps back into bid spotlight

Well, we've all heard this one before. It is the story of how a major banking group is about to buy Bradford & Bingley and it was back again yesterday, sending shares in the mortgage lender 8.25p higher to 262.25p. Bid speculation has surrounded B&B since its float nearly four years ago and dealers talked yesterday of a move on the bank from Barclays.

Only time will tell whether the speculation proves correct. But it is worth investors noting that yesterday was a rather quiet day among blue chips and it is possible brokers were keen to get an old rumour going again in the hope of generating some business. It is an old trick and seemed to have worked well as 12.7 million B&B shares changed hands compared with just 3 million on an average day.

Having said that, B&B was reported to have held takeover talks with Barclays - which came to nothing - 18 months ago. So there is obviously some interest among Barclays' top brass in B&B. The banking giant certainly has the fire power to execute the acquisition. It is valued at more than £28bn, compared with B&B's relatively tiny £1.6bn market valuation. And now may be a good time for such a deal. B&B shares are not far off their 248p float price.

Yesterday's appetite for B&B shares can also be explained by Tuesday's better-than-expected results from its rival Northern Rock. These went some way to allay fears of a meltdown in mortgage industry profits as the housing market slows and interest rates rise. By the close of business, Northern Rock was 18p better at 711p, Barclays had gained 12.25p to 460p, Alliance & Leicester put on 17.5p to 815.5p and HBOS jumped 9.5p to 686p.

There was a warm response from investors on this side of the Atlantic to comments from the US Federal Reserve chairman Alan Greenspan. He described the economic recovery in the US as both sustainable and more broadly based than previously hoped. All this is great news for cyclical stocks and so British Airways jumped 11p to 247p, ICI improved 6p to 215.75p and WPP rose 12.5p to 527p. The FTSE 100 ended the day 37.9 points higher at 4,377.3.

Amec rose 2p to 295p but analysts dismissed recent rumours of a 400p-a-share takeover bid for the construction group. "We doubt there is a player waiting in the wings with a bid that is nearly 50 per cent higher than Amec's recent trading level," Arbuthnot Securities said.

The much talked of sale by the French construction group Vinci of its remaining stake in TBI happened and helped the regional airports group rise 3.5p to 66.75p. Evolution placed the holding of 56.5 million shares at 64.5p with a plethora of institutional investors including JO Hambro and Laxey Partners. Vinci's holding was a legacy of its failed bid for TBI in September 2001 and shareholders in TBI will be happy to see the back of it. The stake had hung over the stock ever since.

CSR rallied 18p to 384p after Tuesday's drop on news that early-stage backers in the Bluetooth technology group had sold £45m of stock. According to a note from Merrill Lynch, the CSR backers have done well and should think about selling the remainder of their holding. The US broker initiated coverage of CSR with a "sell" rating and warned that the company's reliance on just one market makes it a risky proposition for a long-term investor.

"The Bluetooth market is growing very rapidly in the short term but we expect it to mature and decline after 2006," Merrill warned. It predicts the group will achieve revenue growth of 274 per cent this year but fears this could fall to 47 per cent in 2005 and to just 25 per cent in 2006. The broker warned that CSR faces increasing competition in the coming years.

Matalan was 2.5p better to 197.5p as dealers reported heavy demand for the stock from institutional investors. Proactive Sports ticked 0.12p higher to 8.37p in response to the purchase of 57,000 shares at 8.5p by Neil Rodford, the group's chief executive. This now takes his holding to just over 1 million shares.

Hansard, the City PR group, soared 9.5p to 46p after announcing it is looking at a series of acquisitions and a possible equity issue which will be used to fund any deal. The Monaco-based former stockbroker David Newton has built up an 18 per cent stake in Hansard over the past six months.

Medical Solutions, up 0.75p to 35.25p, was said to be putting the finishing touches to a fund raising last night. News of the equity issue could come before the end of the week. Meanwhile, Medical Marketing International shot up 6p to 74p on talk of positive newsflow from the biotech in the coming weeks. Avesco added 1p to 51.5p after Ian Martin, the chairman, bought 50,000 shares, taking his total holding to 300,000.

Savoy Asset Management, chaired by the former chancellor Kenneth Clarke, was unchanged at 127.5p despite a solid set of full-year figures which boasted of a doubling in sales to £7.3m.