Market Report: gains on raised bid hopes

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Investors were logging on to last night on hopes it could attract a bid as City scribblers talked up the price-comparison website's takeover potential.

The group climbed 3p to 108.8p on the mid-tier index after Numis Securities' David McCann said it "could be of interest to certain acquirers, such as a search engine or private equity".

"In both cases we think it offers good value," said the analyst, "and in the former's case may offer even more value for strategic reasons (e.g. if a search engine wanted to move into price comparison)." – whose recent series of adverts were fronted by the comedian Omid Djalili and featured guest appearances from John Prescott and David Soul – has been the subject of similar chatter before and rejected an approach from the Ontario Teachers' Pension Plan in 2008.

Mr McCann, who reiterated his "buy" recommendation, also said that although the group "looks expensive compared to others in the sector", it was cheap relative to websites that have recently floated, or are about to, such as Bankrate and Groupon. He added was "not that dissimilar" to the latter, the discount voucher site which plans to raise $750m (£470m) in an IPO, saying that "both generate commissions through online lead referral".

The FTSE 100's recent run, which has seen it add nearly 350 points in eight consecutive sessions, came to an end yesterday as the top-tier index dropped 21.11 points to 6,002.92. The banks were leading it down following Moody's decision late on Tuesday to downgrade Portugal's debt to "junk", with Barclays and Royal Bank of Scotland dipping 9.75p to 249.75p and 1.34p to 37.85p respectively.

As China raised its interest rates for the third time this year in an attempt to dampen inflation, the miners were also in the red with Vedanta Resources sliding 46p to 2,023p and Eurasian Natural Resources 19p worse off at 795.5p.

There were few major blue-chip risers, but the revival of vague bid talk around Smith & Nephew helped the prosthetics manufacturer to gain 11.5p to 684p, despite traders dismissing the tale. The speculation suggested the US group Stryker could be considering a potential move worth around 900p a share, and that if it does, Johnson & Johnson – which had an approach rebuffed late last year – may make another attempt.

Burberry was also the subject of similar reheated chitter-chatter, but it was not enough to prevent the luxury-brands group being knocked back 25p to 1,450p as it traded ex-dividend.

With fears rising over the effects of allegations of phone hacking at the News of the World (NotW) on News Corporation's attempted takeover of BSkyB, the broadcaster was driven back 18p to 827p. Meanwhile, Trinity Mirror powered up 7p to 49.25p – an advance of nearly 17 per cent – on the small-cap index after Panmure Gordon's Alex DeGroote said the rush of companies pulling advertising from the NotW provided a "possible source of upside" for the Sunday Mirror publisher's revenue.

WPP was knocked down 24p to 762p as Morgan Stanley cut its advice on the world's largest advertising group to "equal-weight", pointing to the fact that a number of agencies have recently cut their forecasts for global advertising this year. The broker said that upgrades to WPP's figures "appear unlikely", adding that therefore "the stock will have limited relative impetus".

Despite shop-price inflation in June reaching its highest level for over two-and-a-half years, signalling yet more pressure on consumers' wallets, the retailers managed to maintain their recent rally. Booker Group was up 7.4p to 77.85p on the FTSE 250 after the wholesaler's first-quarter sales jumped nearly 10 per cent, while SuperGroup – 23p better off at 937.5p – was helped by renewed optimism ahead of next week's trading update. Sports Direct was also higher, gaining 8.4p to 250.9p, as the company bought majority stakes in both West Coast Capital and Cruise Clothing.

Charles Stanley's Peter Smedley welcomed those acquisitions, which represent a move upmarket, calling them "a timely investment in a new opportunity ready to go when the economy improves".

EasyJet lost ground, slipping 8.4p to 358.2p, despite the airline revealing its passenger numbers last month had grown by more than 9 per cent. Investors also checked out of its blue-chip peer International Airlines Group, which shifted back 7.6p to 251.1p even as Deutsche Bank kept its "buy" advice. The British Airways owner released its traffic figures earlier in the week, showing, said the broker, it was "benefiting from a strong London market".

Down among the small-cap companies, Axis-Shield surged nearly 50 per cent, pushing forwards 165p to 500p, after the diagnostics company revealed it had rejected a 460p-a-share approach from the US group Alere.