The FTSE 250 Index raced to a record high today as the wider London market enjoyed another day of strong growth.
P&O made significant gains in the second tier as a possible multi-billion pound bidding war loomed, while the FTSE 100 Index continued its march towards the key 5500 mark buoyed by the prospect of a tartan tie-up involving Scottish Power.
It helped the FTSE 250 Index close 63.3 points up at a record high of 8010.9, while the top flight stood 37.2 points ahead at 5460.8.
P&O shares cheered 13.25p to 447.25p as investors warmed to reports suggesting an auction could be triggered as takeover talks started with Dubai Ports World.
The Singapore government’s investment arm Temasek is also thought to be interested, along with Hutchison Ports – the world’s largest operator and part of Hong Kong-based conglomerate Hutchison Whampoa – and Denmark’s AP Moller-Maersk.
Takeover talk put Carillion in positive territory – up 9p to 285p – amid speculation it was the mystery bidder behind an approach for troubled rival Mowlem, whose shares gained 5.5p to close at 188p.
Back in the top flight, shares in Scottish Power surged 3% or 18p to 578p as rumours that Scottish & Southern Energy (SSE) was considering a merger to rival a bid by Powergen owner E.On swept the market.
The tie-up would create a £19 billion utility giant north of the border, and SSE shares shrugged off a negative start to close 18p ahead at 1001p.
The interest had a knock-on effect on other utilities, with International Power high among the blue-chip climbers, adding 4.25p to 237.75p. It was joined by water firm Severn Trent, up more than 2% or 21p to 986p.
Publishing stocks were also in the ascendancy, with Reed Elsevier up 15p to 546.5p amid bullish speculation ahead of a trading update next week.
Pearson followed Reed higher to finish up 9.5p to 653p, with private quity firms rumoured be looking at the Financial Times.
However, the latest dip in crude prices below 60 US dollars a barrel in New York sent shares in oil heavyweights lower. BP and Royal Dutch Shell fell 2.5p to 635.5p and 7p to 1842p respectively, while smaller rival Cairn Energy was off 30p at 1772p.
Mining stocks felt the chill, with Xstrata near the top of the fallers board, down 11p at 1295p. Fellow explorer Antofagasta was off 12p at 1468p.
Broadcaster BSkyB was another heavy faller as broker Smith Barney cut the stock from a “buy” to a “hold” following last week’s results. It was followed into the red by rival ITV, 0.25p weaker at 109.25p.
And retailers were weak as hopes of a cut in interest rates before Christmas faded. Next slipped 9p to 1347p and Dixons owner DSG International lost a penny to stand at 146.5p.
On a quiet day for corporate news, much of the focus was on smaller firms.
Budget carrier Ryanair fell more than 2% or 0.16 euro cents to 6.82 euros, as it revealed the amount it earns per passenger will be 5% to 10% lower in the final quarter of the year.
Today’s biggest blue-chip risers were Scottish Power up 18p to 578p, Reed Elsevier up 15p to 546.5p, British Land ahead 25p at 963.5p and Friends Provident up 4.25p to 184.5p.
The heaviest fallers were Rentokil Initial down 3.75p to 154.5p, Cairn Energy off 30p to 1772p, BSkyB down 7.5p to 494p and PartyGaming down 1.25p at 90.75p.