Market Report: Shire higher on talk of bid by rival Pfizer

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The Independent Online

Earlier this week, the chief executive of Pfizer – the pharma giant that produced Viagra – said he could countenance a deal with rivals that were "big, small and inbetween".

Yesterday the gossip was that the US giant, run by Jeff Kindler, was planning a £15-per-share offer for the UK-listed group Shire. The group rebounded from a decline in the previous session to close 3.3 per cent up at 1,065p. Beyond that shaky chat, there was little rumour and speculation as one trader said his peers were too busy positioning themselves for new jobs next year. "I've been phoned a few times by head-hunters... There are a lot of 'Starbucks conversations' going on," he said.

The FTSE 100 rose for the sixth consecutive session as the post new-year glow continued to pervade. The commodities and insurance stocks were up while retailers reacted well to several trading updates. The pick of the top tier was Next, which roared 12.47 per cent up to 1,227p. Analysts backed Next's cost control in a difficult trading period, and Panmure Gordon lifted the price target from 1,000p to 1,100p.

Debenhams was top of the FTSE 250, jumping a fifth to 34.25p as a trading update of its own was well received. Now investors are holding their breath to see if today's update from M&S will receive the same warm welcome.

Top of the blue-chip leaderboard at the end of the day was the private equity group 3i, as bottom-fishers piled in. The stock jumped by a fifth to 342.25p, providing some relief after it had fallen 75 per cent in 2008. It is a tough market for private equity, as portfolio valuations come under pressure and the debt markets have dried up.

3i replaced another financial giant at the top. Man Group was at the summit for much of the day, ending up 17.38 per cent to 287p after one of its funds returned a stellar performance. The net asset value of Athena Guaranteed Futures was up 24.9 per cent and the shares of the world's largest hedge fund jumped on further support from brokers Credit Suisse and Evolution.

On Monday, Rio Tinto's stock benefited from talk of imminent asset sales, and there was further good news yesterday. Not only is its Pilabra iron ore mine set to reopen after two weeks, investors had fallen back in love with the sector. One market maker said investors feel they are now underweight in the sector "which has taken a complete shafting". Most of the big beasts rallied, with Vedanta Resources the highest, up 11.34 per cent to 790.5p, and Rio up 11.13 per cent at 1927p.

Down for the second day, but this time at the foot of the table, was Lloyds TSB. The previous day Deutsche had slapped a "sell" on the stock, and Citi came out saying the banking sector wasn't cheap, even at the current values. News that the FSA is to pull the ban on shorting banking stocks didn't help either, especially as it is still trying to get the HBOS merger away. It closed down 5.33 per cent at 119p.

It was closely followed by the business services company Serco Group, which gave up almost all of its gains from the previous day, as it closed 4.18 per cent lower at 464.5p. Johnson Matthey also slumped after Citi downgraded the stock. The analyst Sophie Jourdier cut her rating to "hold" following the group's 75 per cent rally since late November. It had bounced off better-than-expected full-year guidance, a bounce in platinum prices and the weakness of sterling. It lost 42p to close down 1079p.

The water group United Utilities was in the drink, scuppered by a negative note from Goldman Sachs. The US broker cut its recommendation to "sell", saying margins could be squeezed by the regulator, as well as the threat of deflation. The stock sank 2.12 per cent to 622.5p.

The sun failed to shine on PV Crystalox Solar, which makes components for solar panels. The stock cooled as US-listed rival LDK Solar slashed its revenue guidance by 20 per cent saying the credit crunch had smashed demand. Investors failed to follow The Coral, the band that implored us "to put the sun back in our hearts", and it closed down 9 per cent to 97.5p, the worst on the mid tier.

There was one in the pie for the baker Greggs. It fell just over 4 per cent to 3321p before yesterday's update, after its shares' third day of being on a sausage roll abruptly came to a halt.

On the upside for the mid-tier, Cattles was once more charging up the table. It rose a further 19.19 per cent to 29.5p as talk of it landing an FSA banking licence kept the rises coming.

The wider market was looking a bit "squeezy" according to one market maker. International Marketing & Sales Group, which provides sales and marketing services, was one such stock up on a bear squeeze after more than tripling. It drifted off the top, closing up 2.8p at 4.8p. The drug group Summit Corporation rose after it secured a lucrative licensing agreement with Evolva Biotech. The announcement lifted it 27.27 per cent to 28p.

Yet there was a mournful dirge playing for EBTM as it was forced to put itself up for sale. It announced that sales had fallen 33 per cent in December on the previous year, and if it couldn't find a buyer, would have to secure short-term financing. It ended 80 per cent down at 0.225p.