Hopes of a bid power up Cable & Wireless

As the index regained all the decline it suffered after Thursday's terror attacks, traders put hopes for consolidation in the telecoms sector at the top of their defiantly unaltered agendas.

And so it was Cable & Wireless which put in one of the best performances of the day, up 4p to 146.5p. Traders decided they weren't wholly convinced by France Telecom's denials of bid interest, even though the French goliath had dismissed a Sunday newspaper report last month as "fantasy". Investors were also pointing to stories that C&W is interested in making acquisitions, in particular of Energis.

There was no new rumour to suggest a deal was imminent, only a determination to position oneself for a move. As well as a quick buck for shareholders in the acquired companies, there will be real financial benefits across the sector if consolidation is finally ignited. Long-term investors picked up shares in Colt Telecom (up 2.5p at 62.5p), Kingston Communications (1.5p better at 65p) and Thus (up 0.75p to 15.25p) as well.

And there was bullish trading news from another smaller player Pipex Communications, which operates as an internet-service provider and competes with C&W's Bulldog brand. Pipex said it had more than half a million customers, and struck an optimistic tone on the outlook for broadband demand. Its shares leapt 0.63p to 8.75p.

Perhaps one-third of the City's professionals did not make it in yesterday, and trading volumes were well down on the average, but there was no doubting the conviction with which the market rose. That the terror will have little economic impact became the accepted wisdom. That US unemployment is at its lowest level since 11 September, 2001, became another reason to buy, buy, buy. The FTSE 100 index of leading shares closed at a three-year record of 5,232.2, up 73.9 on the day. And the mid-cap FTSE 250 was at an all-time high 7,518.7, up 130.8 points. Of London's 350 biggest companies, just 21 registered share-price falls yesterday.

Outside of the telecoms, sector, other long-standing takeover candidates were also in favour. Exel, the logistics group tipped as a target for Deutsche Post, rose 26.5p to 865p. Amvescap was up 11.5p at 419.5p awaiting news on a move from its Canadian suitor, CI Financial. Kingfisher, long seen as a target for Home Depot, rose 4.5p to 245p.

And Regus, the serviced offices group, surged in very heavy trading, up 6p to 103p on bid gossip.

Investors heard of a Goldman Sachs upgrade to forecasts for STMicroelectronics, the Swiss chip maker. Coming so soon after strong results from Intel, it sent shares in ARM Holdings and Wolfson Microelectronics - two UK chip designers - up 3.75p to 119.75p and up 3.75p to 160.75p, respectively.

Icap was a strong market, its shares rising 9.5p to 323.5p, up 7 per cent on the week. The inter-dealer broker, an intermediary for traders dealing in complex financial derivatives, has been beefing up its electronic trading platform, and there was renewed speculation it will demerge its old-fashioned telephone-broking business.

Shares in the biotech company Alizyme crept back towards the level at which the biotech company raised £32.8m in April. That was at 100p, and the management has been aggrieved that the stock market immediately sent the shares lower, as low as 75p. The company insisted there was no reason the shares should be falling. But investors who did not take part in the placing believed it showed Alizyme had failed to attract a big pharmaceuticals firm to fund further work on its experimental drugs for irritable bowel syndrome and obesity - an assumption that dents confidence in their eventual sales prospects. The main reason for the reversal was a long-delayed regulatory agreement on how further trials of the bowel drug should be conducted. Yesterday, its stock was up 3.5p at 96.5p.

Western Canadian Coal climbed 9.5p to 186p after being tipped by Investors Chronicle. And Solitaire was up 10p to 545p after positive comment on the property management company's regional expansion plans, after the opening of offices in Southampton and Leicester. Ultraframe was 0.75p lower at 44.75p. It makes conservatories, but they have fallen out of fashion.

A big sale of shares in Eurodis Electron sparked fears that negotiations on a merger with an electronics distributor may be off. The shares fell 0.13p to 0.92p. And ContentFilm, the disastrous film financing group, collapsed 0.38p to 1.87p after an institutional investor gave up, dumping 1.7 million shares at just 1.5p.