Market Report: Sighs of relief drown out all the takeover talk

Traders were flabbergasted as the markets ended the week almost flat despite the collapse on Monday. The collective sigh of relief drowned out almost all takeover chat, except the yawn-inducing re-emergence of Best Buy supposedly bidding for Carphone Warehouse.

The UK retailer rose 3.91 per cent to 299p, although one senior trader was having none of it. "This sounds like someone puffing the stock to me," he said. Rumours of the two companies merging have done the rounds for the past few months, strengthened by their joint venture in the US. No concrete newsflow has emerged on a takeover.

The miners have been bouncing more than Rik Waller's trampoline recently, but they ended the week on a high note. Vedanta Resources was the pick, storming up 7.21 per cent to 1829p as confidence returned with the rising commodity prices.

The FTSE 100 continued its previous day's strong performance in the morning, although not with quite the same pyrotechnics. It rose 97 points before lunch on US jobs data and an update on its rescue package, but weakened to close 6.8 points down at 5869.

Imperial Tobacco has suffered as profit takers locked in some gains. It returned to form yesterday on support from Morgan Stanley. The broker recommended investors switch out of BAT into Imperial because of the potential upside from its acquisition of Altadis. It rose 9.07 per cent to 2430p, top of the leaderboard.

Elsewhere, a broker note lifted the top-tier travel agents. Lehman Brothers initiated coverage of Thomas Cook with an "overweight" rating and Tui Travel at "equal weight". While it pointed to long-term competitive issues from low-cost carriers, it pointed to positive short-term momentum through potential consolidation in the industry. Tui was up 4.25p to 242.25p, while Thomas Cook rose 7.75p to 248.75p.

Investors were toasting Carlsberg and Heineken, which sealed a deal for Scottish & Newcastle yesterday. Uncertainty had crept in over the outcome of negotiations, the markets went haywire, but the consortium announced S&N had backed its 800p per share offer in the morning. The UK brewer rose 2.22 per cent to 783p.

Further corporate activity was mooted in Friends Provident. Talk in the papers yesterday morning suggested Friends was to break up the group following a strategic review. The insurer, which is to report its findings next week, rose 0.9p to 164.9p.

The housebuilders were the biggest drag on the market after the positive sentiment from earlier in the week dried up. Worst of the day was Persimmon, which crumbled 6.88 per cent to 826p, followed by Taylor Wimpey, down 5.5 per cent to 193.25p.

Insurance group Old Mutual fell 6 per cent to 133.2p. The sale of general insurance division Mutual & Federal has dragged on since its announcement in early November, and it put out a statement saying it remains in talks. It has agreed to sell up to 70 per cent of its holding in the unit to Royal Bafokeng Holdings for about £400m.

On the second tier, further takeover reports lifted Northern Rock close to the summit. The Geordie lender whay-ayed its way up on reports that private equity group Cerberus could wade in with a bid. It rose 6.73 per cent to 111p.

Imperial Energy Corporation was another riser after revealing its hydrocarbon reserves in Russia had risen 229 per cent. The announcement sent the shares up 3.45 per cent to 1499p. Merrill Lynch and Oriel Securities put out bullish notes in response to the news.

Ashmore Group stormed up 10.09 per cent to 251p on a positive report from Evolution Securities, which maintained its "buy" rating. The stock failed to rally in Thursday's rises, which led the broker to say it is "the strongest secular growth play in the sector. On current valuations its premium prospects are unrecognised".

The soaraway riser on the previous day, St James's Place, landed with a bump as the profit takers piled in. It fell a tenth to 277p, compounded by Goldman Sachs, which cut its rating to "neutral" from "buy".

Pub group Marston's was also slumped in the gutter, after an interim management statement. The group fell 5.81 per cent to 271.5p after a cautious outlook for 2008 relating to the smoking ban and weakening consumer confidence.

Chromogenex was among the fallers in the wider market on a statement of its own. The group, which makes lasers for use in healthcare, was down a third to 3.25p after it warned on profits.

Another faller was Kenmare Resources, after production was hit by problems with the power supply and equipment in northern Mozambique. It slumped 6.74 per cent to 45p.

There was a more positive update from Cambridge Mineral Resources, which stormed up 29.41 per cent to 2.75p as it secured $15m-worth of funding.