Market Report: Anglo-Dutch publisher inspires takeover story

THE PUBLISHING giant Reed was back on the stockmarket's front page yesterday as whispers of a bid were splashed all over the dealing floors.

The beleaguered Anglo-Dutch group papered over recent cracks, ending 22p higher at 481.5p in respectable volume of 3.74m, as speculative buyers moved in.

The boys in the know were spurred into action by resurfacing rumours that the leaderless Reed could soon be taken out of its misery. Its Dutch rival, Wolters Kluwert, was still the hot favourite bidder despite the collapse of merger talks a year ago. Market insiders said that the Holland- based predator could be tempted to launch a pounds 15bn strike by Reed's embarrassing failure to find a chief executive and rumoured trading difficulties.

Last month the company had to admit that its chosen man, Jonathon Newcomb from Simon & Schuster, had pulled out at the last minute. Reed's plight was compounded by recent whispers - vehemently denied - that the next results will contain a profit shock.

Some scheming traders even said that Reed could spin off its business magazines division - worth some pounds 4bn - to pave the way for a merger.

Wolters was not alone in the list of potential bidders. UK predators Reuters, up 20p to 864p, and United News & Media, down 2p to 649p, were also mentioned.

The Reed's rumour mill was also powered by talk that a host of brokers is preparing to issue notes on the company.

The rest of the market was not in the mood for headlines. The FTSE 100 closed a sleepy session 46.4 higher at 6,348.6 on the back of a steady Wall Street and rising hopes of peace in Kosovo. The undercard was just as lacklustre, with the FTSE 250 managing a 10.6 rise to 5,719.6 and the Small Cap ending 4.3 better at 2,552.1.

British Steel saw an astonishing 74m shares traded - nearly 10 per cent of the market's overall volume. The stock firmed just 0.25p to 162p but institutions are keen to fill their boots ahead of details on the merger with Dutch rival Hoogovens.

This sparkling performance almost overshadowed South African Breweries. The beer group was the toast of the blue-chips, soaring 37p to 558p thanks to a mixture of technical and political factors. Traders said that overseas arbitrageurs were buying the stock in London in the hope of selling it at a profit in Johannesburg.

The arbitrageurs are apparently convinced that the South African market will boom if the African National Congress wins the election.

On a less outlandish note, Shell rose 9.75p to 462.75p on hopes that the collapse of the Texaco-Chevron deal will open up new merger options. However, BG, down 0.25p to 353.5p, is still seen as the favourite partner.

Hays jumped 25p to 621p after courier group NFC, up 5p to a 12-month peak of 188.5p, said the logistics market is looking good.

Some roguish late trades helped illiquid Schroders to a 71p advance to 1,411p, while Sun Life & Provincial, another tightly-held stock, rose 16.5p to 484.5p after a Lehman push.

Bank of Scotland ascended 11p to 861p amid whispers that it will sever its link with preacher Pat Robertson.

SmithKline Beecham shot 18p higher to 846p on continuing talk of a tie- up with Swiss rival Novartis or Glaxo Wellcome, down 9p to 1,796p. This week's launch of SB's new blockbuster diabetes drug provided additional support.

BAT was dragged 16.5p lower to 599.5p as profit-takers moved in despite a US legal victory. Engineer Invensys, down 7p to 309.25p, also fell to profit-takers, while Sainsbury's shed 2.75p to 386p as Goldman Sachs and others cut forecasts.

Ashtead topped the midcappers' risers chart. The plant-hire group climbed 13p to 177.5p after a stock overhang was cleared. Vague rumours of a bid from one of its UK rivals also did the rounds.

Insurer St James Place went 7p better to 243p on revived talk that Prudential, up 4p to 846p, might use its large stake to mount a bid. The sausage skin- maker

Devro sizzled 4p higher to 131.5p as hopes of a management buy in returned. Cement group Rugby, up 3.5p to 114.5p, and leisure giant Rank, 5.5p higher to 247.5p, benefited from bid talk. Somerfield, 7.5p better at 288p, was also a rumoured target.

The property group MEPC built an 8p advance to 527p on hopes of a bid from a UK rival. British Land, up 16p to 563p, is a possibility.

Poor old Pilkington won a 6p reprieve to 84p after good results, while money printer De La Rue cashed in a 19p rise to 346.5p after Wednesday's figures. Radio group GWR tuned in to a 20p advance to 426.5p on digital license hopes.

First Choice nosedived 25p to 223p on fears - confirmed after the close - that the European watchdog will have a long look at the bid from Airtours, down 15.5p to 519.5p.

Rail maintenance group Jarvis was derailed by the regulatory squeeze on Railtrack, one of its largest clients, and lost 15.5p to 453.5p.

Pressac, the electrical parts maker, shed 20p to 172.5p on fears that orders from car manufacturers are falling.

Among the minnows, Internet stocks were in demand. Web content provider Dialog jumped 13.5p to 98p amid talk of a revenue-boosting deal with a US net giant.

Aim-traded On-Line rose 10p to 162.5p after striking a deal for a sports web site with Ofex-traded bookie Netbet, down 15p to 262.5p.

Desire Petroleum drilled a 5.5p advance to 32.5p on vague hopes of an oil finding, while broker NRP rose 5p to 240p after changing its name to Teather & Greenwood.

SEAQ VOLUME: 896.5

SEAQ TRADES: 63,755

GILTS INDEX: 106.57 +0.21

BEARISH CLOUDS are gathering over Sinclair Montrose. The healthcare group announced in January it had received some bid approaches but has failed to announce any developments. Insiders fear the management's attempt to buy the company out might have run into difficulties. A delay in the results' publication is also seen as a bad omen. The uncertainty has caused the shares to slide from 160p after the bid announcement to yesterday's 121p.

FTSE INTERNATIONAL, the index provider, will today launch a consultation paper which could lead to radical changes in the composition of the indexes. Market participants will be asked to comment on contentious issues such as how to determine the nationality of a company, how to calculate the free-float and how to treat cross-holdings between firms. Any rule change is likely to be preceded by a lively debate by the Square Mile big-hitters.