Market Report: OFT puts the brakes on Booker's deal

A plan by Britain's cash and carry giant Booker to pay cash and carry off its rival Makro earlier this year didn't get as far as the car park. Booker agreed to buy the UK arm of the German retailer Metro for £140m back in May. But the deal, which combined Booker's 170 cash and carry locations with the 30 Makro shops, has been referred to the Competition Commission by the Office of Fair Trading (OFT).

An OFT spokesman said: "The merger brings together two close cash and carry competitors and reduces the number of national operators from four (Booker, Makro, Bestway and Costco) to three."

Following the news Booker's shares bagged a 3.9p loss to 100.5p.

On the blue-chip index, traders speculated that the Indian "sultan of spirits", Vijay Mallya, is in town to ink a deal to sell a stake in his United Spirits group to the drinks giant Diageo. Sources suggest that the deal for a majority stake could be valued at around $1bn (£625m) and could be announced as early as today.

Diageo's shares trickled down 2.5p to 1,789p.

The benchmark FTSE 100 index had another bumpy ride yesterday. It did not follow the US down in morning trading, and kept above the 5,800 mark. But by mid-afternoon it had begun to reverse as concerns over the progress in easing the eurozone crisis spread, and it ended down 15.58 points at 5,776.05.

Security group G4S saw its shares fall 8.4p to 259.2p after losing its contract to run Wolds prison in East Yorkshire, which will move back under public-sector management next year. G4S also failed to win any new prison contracts.

The insurer Aviva said it is nearing the sale of its US life and annuities business and its shares gathered 1.8p to 330.3p.

Supermarkets group Morrisons reported that its sales have fallen back even further than investors had expected. It slipped 4p to 263.5p.

Staying on the food theme, the mid-cap index milk and cheese maker Dairy Crest said its food sales – such as Cathedral City cheddar – are strong but its milk business is still causing pain. Its half-year, pre-tax profits fell 16 per cent to £19.1m. But scribes at Investec kept their buy rating on the stock and a share price target of 377p. Investec's Nicola Mallard said: "The second half should be better as the dairy business moves from loss back to profit." The shares delivered a 4.2p fall to 351.4p.

DP Poland, the master franchise in Poland for Domino's Pizza, raised £10.5m in a cash placing at 15p a share to fund stores over the next two years. It has hired two non-executives – the former Domino's Pizza UK & Ireland chief executive Chris Moore and the former chairman of Caffè Nero Gerry Ford. The shares were static at 22.5p.

Balfour Beatty's share price came off the rails yesterday. The construction group said there was poor demand for construction and rail projects in the UK and Europe, and issued a profit warning at its third-quarter results.

Balfour's shares were derailed on the news, losing 55.9p, or more than 18 per cent, to 250.1p, when it admitted the "performance of UK construction business is weaker than anticipated and structural problems in European rail markets added to the challenges".

It began a restructure earlier this year. But despite the cutbacks, the group said it will take a £10m hit to profit in 2012. Balfour expects demand to stay tough into next year.

Still on the mid-cap index, the chemicals specialist Yule Catto gave an update in line with expectations that helped the shares to climb by 10.8p to 165.6p.

Trinity Mirror reassured investors that its full-year profit is on track. It said the advertising outlook had improved, and its shares ticked up 4.25p to 70.5p.

The light-emitting diodes maker Dialight was looking decidedly dull after it revealed a delay to a major contract. Its shares faded by 67p to 1,115p.

Another day, another rumour does the rounds that US private equity is looking at a UK company. This time traders were speculating that a bid could be knocked together for the tool hire group Speedyhire. Some even suggested it could be as high as 60p a share. But its shares only managed a 1.25p gain to 34.25p.

Shares in the technology services provider Xchanging were up 11p to 119.5p after the company announced that its subsidiary has bought the Milan-based software and IT business AR Enterprise.