Market Report: Wellstream keeps M&A chat on the agenda

The blue chips managed to make it six consecutive sessions on the rise, but there was little enthusiasm as investors switched into defensives and oversold stocks on a quiet Friday. The M&A chat had hit a wall, except for rumours of a bid for oil services company Wellstream. No suitors were named but some were putting it about that a bid of 880p per share was close. It jumped 4.5 per cent to close at 700p.

Looking handy at the top of the pile was Kingfisher, the DIY group that owns B&Q. It rebounded from falls on the previous day as analysts lined up to pat it on the back. The stock had fallen despite strong results, as much of the good news had been priced in after an embarrassing leak the previous week. It stormed up 4.29 per cent to 211.9p yesterday as Deutsche Bank, Société Générale, Nomura and Citi all raised their target price. Nomura, at the bottom end, targeted a rise to 220p, while Citi and SocGen were aiming to hit 300p. The love-in helped lift the entire retail sector, with Next not far behind, climbing 2.92 per cent to 1,870p.

Investors were pleased with British Land, which confirmed it had sold a 50 per cent stake in its Broadgate property in London to private equity giant Blackstone. The buyout company paid £77m and took on £1.97bn of debt for its half, with British Land's chief executive, Chris Grigg, saying the two companies would invest £100m in the site. He added that bringing in Blackstone would allow it to make new acquisitions. The stock took bronze on the day, up 3.33 per cent to 528p.

GlaxoSmithKline was one of the defensives whose shares enjoyed a nice tonic during the session and it was also bolstered by some newsflow. After selling a load of its swine flu vaccine to Singapore's government this week, the Swiss followed suit. An interesting story also emerged from India, with reports that the pharma giant was interested in taking a 5 percent stake in local drugmaker Dr Reddy, a move welcomed by analysts.

Goldman Sachs released a note backing the European banks yesterday. The broker increased its estimates following lower peak provision estimates and stronger trading, adding that the market-weighted sector upside stands at 12 per cent. The market was only really happy with HSBC, which rose 1.7 per cent to 730p. The rest of the sector was weaker, although Lloyds Banking Group ended slightly higher after it announced it was attempting to withdraw from the government's asset protection scheme, or at least change the terms a bit. It closed 0.9 per cent up at 110.6p.

The index struggled for direction yesterday. It fell a little in early trading but bobbed back up, closing the week 8.94 points higher at 5,175.35. Anthony Grech, market strategist at IG Index, said: "There's clearly a conflict going on, with some traders feeling it's time to book profits, but the sentiment is far from universal.

"Fundamental data has been very thin on the ground this morning but miners are feeling some strain after the 20 per cent rally we've seen in the sector over the last month. Gold also seems to be checking its recent gains, which will also be taking some of the shine off the sector." Lower metal prices sent the miners down, and even talk that Xstrata will not be going after Anglo American could not save it, despite prompting a spike in the morning. It closed down 1 per cent at 965p.

The wooden spoon was taken by Balfour Beatty after solid rises on Thursday following its acquisition of Parsons Brinckerhoff. The construction group lost 5.8 per cent to 349.7p as Numis cut its rating to "add" from "buy".

Another stock to lose its sheen was Tullow Oil as investors banked profits. The profit-taking came after a 16 per cent rise this week following talk of a big find, which was announced yesterday. The stock fell 5 per cent to 1,179p.

Deutsche Bank analysts were pulling the plug on Game Group ahead of next week's results. The broker's decision to cut its estimates ahead of the full-year figures sparked a plunge in the shares, which eventually closed 2.2 per cent down at 170.8p.

Irn-Bru maker AG Barr initially tasted sweet as shareholders backed a move to subdivide the shares. The group who sells the fizzy pop "made in Scotland from girders" said it would improve liquidity and bring in more investment. The shares rose 1.63 per before turning sour, closing down 3.7 per cent at 1,477p.

On the upside, JKX Oil & Gas rose after successful testing of an exploration well in Hungary. Investors were starving, pushing the shares up 3.6 per cent to 298.6p. Elsewhere in the oil market, smaller exploration and company San Leon Energy, which operates in Morocco, Poland, Italy and the US, yesterday announced a £6.3m placing with Petroleum Geo-Services agreeing to subscribe. The shares slumped by a tenth to 23.5p, although ended above the 15p placing price.

There was little corporate news of interest in the wider market, although Songbird Estates, which controls Canary Wharf in London, was flying up 1.54 per cent to 32.5p after Qatar further increased its commitment to the company. Songbird also said it was increasing its shareholding in Canary Wharf from 60.8 per cent 69.3 per cent.