Market Report: Buffett stake fuels talk on Kingfisher's future

The group's shares rose 8.25p to 254p as Geico, an insurance business, was found to have a stake of 2.8 million shares in the retailer. According to US regulatory filings, Berkshire Hathaway bought the shares in May but their holding came to light only yesterday, immediately prompting speculation about Kingfisher's future.

The retailer has long been talked of as a takeover target and the rumours have intensified since April, when the company reported its first quarterly fall in profits for two years.

Home Depot, the world's biggest home-improvement retailer, is traditionally seen as the most likely buyer of Kingfisher but talk of a tie-up between the two has died down since Robert Nardelli, the chief executive of the US group, ruled out such a move in June. Since then, there have been reports that Wolseley, the building-materials group, might be interested in bidding for Kingfisher.

Meanwhile, the FTSE 100 rose 14 points to close at 5,377.5, a level not seen since before 11 September 2001. Mid-caps also made good progress as the FTSE 250 gained 32 points to 7,734.6.

Elsewhere, Man Group gained 61p to 1,687p after the company's flagship hedge fund, AHL, announced another week of strong gains. The fund is believed to generate about 14 per cent of Man's total profits. Lloyds TSB was not so lucky as a downgrade by HSBC Securities sent its stock 8.75p lower to 474p. HSBC cut its stance on Lloyds to "underweight" from "neutral" and pointed out to investors that the sales growth the bank reported at its recent results presentation is the slowest seen from any of the major UK banking groups over the current reporting season. HSBC Securities is worried that Lloyds is being penalised because of its limited exposure to corporate and capital markets.

Pilkington rose 3.75p to a fresh high of 132.75p as the old story of a bid for the glass maker again made its way into City dealing rooms. Brambles Industries dropped 4p to 321.25p on rumours the group's Cleanway waste-management system could be about to announce an acquisition in Germany. According to the talk, Brambles is mulling the purchase of a business from the German utilities giant RWE.

EasyJet jumped 9.5p to 284.5p as traders responded to news that Icelandair had bought a further 1.1 per cent of the no-frills airline, taking its total holding to more than 13 per cent. The move revived talk that the Icelanders might be tempted to buy the whole company, but easyJet's founder, Stelios Haji-Ioannou, was quick to pour cold water on the speculation.

Mr Haji-Ioannou, whose family owns 41 per cent of the carrier, reiterated his long-held position that he is committed to the airline and has no intention of selling his holding. EasyJet is the flagship of the flamboyant entrepreneur's fast-expanding "easy" brand, which in recent years has moved into car rental, mobile phones, internet cafés and cruises, and is therefore unlikely to sell it.

Marconi dropped 7p to 301p as investors became increasingly sceptical that an offer for the company from China's Huawei will ever be forthcoming. Although Marconi admitted to being in bid talks on Monday, analysts point out there is significant product overlap between the two companies and if Huawei were to buy Marconi it would need to shut down a large part of the UK group's operations. This is an expensive task and the Chinese group's management lack the expertise to execute such a coup, analysts suggest.

Brokers reckon business is booming at Ashtead, unchanged at 113p, given Tuesday's statement from its US peer United Rentals. The North American company confirmed that growth in the tool-hire market across the Atlantic continues to show robust growth. This bodes well for Ashtead, which generates about 90 per cent of its profits in the US these days.

Lower down the pecking order, Telecom Plus dropped 1p to 157p as John Levin, a non-executive director at the company, sold 13,700 shares at 154p. Shares in Telecom Plus have lost 40 per cent of their value over the past six months, which is why brokers were surprised to see Mr Levin sell down his holding.

Proteome Science saw hot money pour into its shares, sending them 2.5p higher to 84.5p. Those punters who bought into the biotech yesterday reckon bullish news is likely from the company in the near future. Cambrian Oil & Gas soared 1.75p to 7p after issuing a positive drilling update from its prospect in the Kyrgyz Republic.