Market Report: Joe Lewis launches bid for pubs giant Mitchells & Butlers

What is Joe Lewis up to? That was the question on everyone's lips in London this morning after the billionaire currency investor launched a bid for the pubs giant Mitchells & Butlers from his luxury yacht parked outside St Katharine Docks.

Lewis, who owns 22.8% of the Harvester owner, said he was minded to bid 230p a share via his Piedmont vehicle but M&B said that was not enough, with the offer providing only a small premium to Friday's price. As some speculated that the aim of the Tottenham Hotspur owner was to put M&B in play as a takeover target, one wild tale claimed that as well as potential private-equity interest, Whitbread could be mulling a move.

Traders were not impressed by the vague chatter, however, saying the blue-chip group, which eased back 4p to 1543p, was more likely to concentrate on its Costa Coffee and Premier Inn businesses rather than its pubs operations.

Instead, they speculated that Lewis' plan could be to take M&B private before selling off parts of the business, although they were pessimistic over the chances of him offering over 250p a pop.

Numis Securities' Ivor Jones was certainly not happy, cutting M&B's rating to hold, and complaining that the news was likely to "be a significant distraction for the board". But this failed to stop the group taking pole position on the FTSE 250 index, increasing 8.4p to 243.9p.

Despite early signs of bargain-hunting, the FTSE 100 swiftly turned downwards yet again after shedding nearly 4% in the previous two sessions. The index slipped a further 19.2 points to 5110.42, with reports China could buy into Italian debt failing to impress.

The banks were again being damaged by speculation over the state of their French peers. As reports emerged claiming BNP Paribas had lost access to US money-market funds - they were subsequently denied by the bank - Barclays moved down 1.2p to 140.38p while Lloyds and Royal Bank of Scotland slipped back 0.1p to 30.49p and 0.07p to 20.73p respectively.

The wooden spoon was taken by Cairn Energy after the oil explorer disappointed investors - while putting a smile on the faces of environmentalists - with yet more bad news from its controversial quest to discover black gold off Greenland. For the second time this year, the group revealed a well had failed to find oil, prompting it to slide 28.8p, or more than 9%, to 283.5p.

The bears were on the attack again over Ocado, as Panmure Gordon's Philip Dorgan more than halved his target price to 50p from 103p. The City scribbler said he continued to believe the online grocer would "not make an adequate return on capital for the foreseeable future", although it only eased 0.1p to 112.4p in response.

The takeover saga around Omega Insurance took its next step, as its peer Canopius unveiled an indicative offer worth 83p a pop. This came a day after Omega had agreed to sell a quarter of its shares to investment vehicle Haverford for the same price.

Inmarsat continued to be buoyed by bid mutterings, climbing 5.3p to 481.7p after talk of potential private equity interest reemerged on Monday.