Britain's FTSE 100 closed lower on Friday, breaking a five-day winning streak, but a series of bid rumours kept the market on its toes, with dealers reporting talk of take-over moves for fund firm Amvescap, consumer goods maker Reckitt Benckiser and logistics group Exel. All three stocks were among top blue chip gainers by the close of play, helping to counter a broadly weaker oil sector. And while there was no hard evidence that any of the rumoured bids would materialise, analysts said the hope of a big take-over was good for the market.
"If there is a mega deal, it would be the icing on the cake," said Jim Wood Smith, head of equity strategy at Gerrard. He added, however, that even talk of a deal would help to keep the market moving ahead.
The broader market fared less well, with the FTSE 100 down 20.6 points at 4,832.8 by the close of play. Analysts predicted the blue chip index would move higher over the coming months but cautioned that it had hurdles to overcome, including an expected interest-rate hike from the US Federal Reserve next week.
"Rising rates are the restraining feature, good corporate results are the feature that should be pushing the market ahead, and it's a bit of a struggle between the two at the moment," said Mike Lenhoff, chief strategist at Brewin Dolphin.
Oil prices were down on Friday but have recently approached the $50 a barrel mark, and the potential for violence at this weekend's Iraqi elections was also mentioned as a concern for the market.
The session's star performer was Anglo-American fund firm Amvescap. It closed up 4.6 percent on a late-breaking rumour that French bank Societe Generale was about to bid for the company. Neither company would comment on the talk.
Next on the gainers' list was Reckitt Benckiser with a 2.7 percent increase. Dealers said Procter & Gamble's $57 billion take-over of US giant Gillette meant that US rivals such as Colgate-Palmolive might be looking to buy a company to maintain their market position and they named Reckitt as one possible fit. Unilever, once seen by dealers as a possible target for P&G, rose 1.5 percent.
Logistics group Exel also pushed ahead after the chief financial officer of rival package delivery firm UPS talked about wishes to expand the US company's logistics and freight-forwarding business. The comments added to dealing-room chatter earlier in the week that Exel could be a target for German rival Deutsche Post, Fedex or UPS, and the shares rose 2 percent.
Bid talk also extended to the mid-cap arena, where shares in variety retailer Woolworths rose 1.9 percent on press reports citing market speculation that a venture capital firm would buy the company.
Radio group Chrysalis was the best FTSE 250 performer, up 5.4 percent and taking back most of its drop on Thursday, when market data showed its flagship London station was losing market share. Virgin Mobile led mid-cap fallers with a 4.6 percent drop after Goldman Sachs cut its stance on the stock to "in-line".