The company's shares finished in the silver medal position on the FTSE 100 leaderboard, as rumours of a bid for oil and gas group circulated.
Tullow declined to comment on the chat, but sources close to the group described the speculation as "rubbish", pointing out that Tullow is an oft-mentioned takeover target and that the stock had slipped last week after an update. That did not stop the shares climbing by 26p to 1,182p, even as the analysts at Goldman Sachs cut their price target for the stock from 1,684p to 1,667p.
Aside from the renewed rumours about Tullow, trading was light thanks to the Labor Day holiday in the United States. "With US markets closed for a public holiday, and nothing of any note on the economic calendar, traders are resigning themselves to a quiet session ahead, with little change expected on the FTSE following the early gains," said IG Index's Will Heddon yesterday morning.
His predictions proved to be on money as early gains were maintained. The FTSE 100 index of leading shares closed the day up 11.04 points at 5,439.19, continuing the form last week, helped on Friday by upbeat news on the US jobs market.
it was Home Retail Group that finished as top dog as watchers at Seymour Pierce upgraded the owner of Argos and Homebase. The analysts said that a trading update expected on 9 September "will show that sales and gross margins for the quarter ended August 2010 remain relatively weak but are likely to be better, we suspect, than market expectations and better than the previous quarter.
"Our view is that a possible downgrade to earnings is fully reflected in the current share price. The stock, which has been the worst-performing FTSE 100 stock to date, declining by 28 per cent over the last year, is beginning to look good value." The shares rose 5.8p to 227.1p, checking declines of nearly 10 per cent in the last month.
The telecoms groups were also in vogue. BT Group had a good day as its 3p climb to 140.6p meant it pushed into the upper echelons of the index. BT continued its good form of last week when shares got a boost from a number of analysts saying the falls in bond yields would not hit its gaping pension deficit too badly.
BT's move came as Cable & Wireless Worldwide began the day top of the index, before finished in negative territory. Rumours that a bid from the US telecoms giant AT&T would firm up into a material offer continued a trend that has seen the shares climb by more than 16 per cent in the last seven days, helped, it has to be said, by the possibility of a rival tilt by Singapore's SingTel.
The company refused to rule out an approach, but said that it "doesn't comment on market speculation".
A raft of sectors figured among the FTSE 100 risers. The outsourcers were represented by both Serco and Capita, up 10p to 613p and 9p to 742.5p respectively. Investors have backed both groups in recent weeks as they gear up to benefit from the imminent public spending cuts.
The theory is that as George Osborne's axe falls, Whitehall departments will increasingly look to the sector to maintain services at a lower cost, meaning more work for Serco and Capita. Indeed, both companies have seen positive moves in the last month as details of the spending cuts get closer.
Pharma group GlaxoSmithKline spent all day fighting to stay off the bottom of the FTSE 100 after the UK's Medicines and Healthcare Products Regulatory Agency said that its diabetes treatment Avandia should be pulled from sale over concerns that it can lead to heart attacks in some patients. GSK finished bottom of the pile, despite insisting that extensive research programme showed that Avandia was safe when used appropriately. The shares fell 19.5p to 1,249p.
Bunzl saw its stock fall by 10.5p to 747.5p. Most analysts put the falls down to a correction after Bunzl's stock put on more than 10 per cent last week on the back of analysts' upgrades.
Autonomy Corp was another laggard as speculation about a suitor ebbed away. Despite climbing by 13 per cent last week, the stock slipped by 27p to 1,748p yesterday.
the FTSE 250 was almost a carbon copy of the leading index yesterday, putting on 36.3 to close at 10,240.41, all on thin volumes. The big winner was the private label household cleaning products group McBride, which saw its stock jump by 11.5p to 170.2p. The increase must have been all the sweeter after Goldman Sachs cut its recommendation on the shares from "buy" to "neutral". The rise comes after a 17 per cent hike last week, despite the group saying it is seeing higher input costs and a tough outlook for the coming months.
On the other end of the scale, Premier Foods' shares stumbled after gains on almost 30 per cent last week. Despite announcing smaller profits a month ago, the group has enjoyed a bumper few weeks, helped by higher food prices. But investors clearly lost some of their nerve yesterday and took profits, as the stock fell 1.06p to 19.79p and finished bottom of the FTSE 250.
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