The brewing industry is ripe for further consolidation following last summer's takeover of Courage by Scottish & Newcastle, a deal that will undoubtedly put pressure on the smaller regionals.
There is some belief that Wolverhampton & Dudley, which suffered more than most from the beer price war between Bass and Courage, may be looking to join forces with Vaux which is finding the going far from easy in its North-east heartland. Wolves closed 8p higher at 592p.
Bass, a penny higher at 728p, is also viewed in some quarters as a possible suitor for Vaux. Besides pubs and brewing, Vaux operates the Swallow hotel chain that could swiftly be converted under the Holiday Inn flag of Bass.
Most speculation, however, discounts a move by Bass simply because it would run into problems arising from the controversial Beer Orders over the number of pubs it can own.
Vaux is valued at pounds 405m at the current market price, and pounds 10m more than Wolves.
The industrial logic for the two groups to join forces is strong. A merger would create a powerful regional with interests spanning the Black Country across the Pennines and into the North-east where Wolves already has a presence with its Cameron brewery.
The takeover speculation also buoyed Morland, the Oxfordshire-based regional brewer. Morland, ahead 12p to 595p, has traded well in the last couple of years since Green King, unchanged at 613p, failed to buy the company. Lively activity in the breweries sector was not indicative, however, of the rest of the market. Profit-takers took advantage of the previous day's surge, although falls were contained by general optimism that UK interest rates would soon be cut following yesterday's lowering of the repo rate in Germany.
The FT-SE 100 share index managed to hold ground above 3,700 - but only just - thanks to a tentative rally in late dealings as Wall street opened higher. The index, down 14.9 points an hour before the close, finished 6.4 lower at 3,704.2.
A similar pattern was recorded among second-liners. The FT-SE 250 ended the session 1.9 lower at 4,035.6.
Among the leaders, British Gas had a torrid day. Shares dropped 12p to 255.5p and more than 33 million were traded. Several broking houses are concerned the company would have to foot the bill on the controversial pounds 40bn of high-priced contracts signed a few years ago with gas producers.
Ladbroke, the hotels and betting shops company buoyed recently by talk of a bid from Bass, also had a bad day and fell 4.5p to 160p as a large seller of around 6 million shares appeared on the scene. Trading volume totalled 15.35 million, although the seller, according to a source, still believed that Ladbroke was a potential bid target at a later date by moving heavily into the options market. In what is known as a cylinder deal or butterfly spread, 6,000 calls and a matching number of puts were dealt in the August 160p series.
The takeover spotlight shone brightly, however, on the Savoy Group which is piggy-in-the-middle of the Forte battle with Granada. Shares in Savoy, as low as 930p just over a week ago, surged 100p to pounds 11.20.
Granada, steady at 693p, is being increasingly tipped as the favourite to win the fight for Forte, off 3p to 377.5p. Granada has pledged to sell Forte's holding in the Savoy, and there are strong rumours that a queue of buyers comprising US hotel companies is forming.
Confirmation of a bid approach boosted Lloyds Chemists by 75p to 366p. Favourite suitor is Unichem, down 10p to 239p.
Kingfisher, one of several retailers to announce Christmas trading statements, is also rumoured as a possible buyer. Shares rose 9p to 538p.
Body Shop's downbeat trading update was greeted with a 1p mark down to 151p. Better news lifted Allders 3p to 176p, and JJB Sports advanced 20p to 618p.
Negative equity took on a new meaning at Wainhomes. The shares collapsed 41p to 68p on news of a police investigation into alleged valuation irregularities, over invoicing and theft.
In pharmaceuticals, Medeva dropped 14p to 259p as the Food and Drug Administration in the US said there was a possibility its hyperactivity drug for children drugs might cause cancer in mice.
r There was good demand for shares in IBC Group, the conference organiser and publisher. Some orders, though, were said to have been left unfulfilled due to a stock shortage. Shares increased 13p to 286p amid talk the company was on course to produce sparkling results for the 1995 year. The half-year to June produced a rise in taxable profits from pounds 4.94m to pounds 6.4m.
r Greenall Group's claim for a place among the stock market's elite 100 companies was reinforced yesterday as the shares added 2p to 580p on the sale of most of its Thos Peating Fine Wines business in East Anglia to Victoria Wine, part of Allied Domecq. The pubs, hotels and leisure group is valued at pounds 1.714bn, marginally more than the worth of each of the bottom five in the FT-SE 100.Reuse content