A flurry of takeover speculation failed to keep the London market out of the red as investors continued to fret over higher interest rates today.
With sentiment also affected by a heavy drop for mobile phone giant Vodafone, the FTSE 100 Index closed 0.6% lower – a drop of 34.3 points to 5620.9.
One bright spot for investors came from the performance of Smith & Nephew and Argos owner GUS after both stocks were lifted by bid speculation.
The medical devices maker closed up 2.5p at 436.5p – it had been higher earlier in the session – as investors speculated over a move for the company, possibly from US firm Bristol-Myers Squibb.
Buy-out interest also lifted GUS by 5p to 918p, as the market pondered a move by one of the big US private equity houses.
Miners continued their recent volatility with Xstrata among those to taste life in both the risers and fallers boards of the FTSE 100 Index. It eventually closed 2p higher at 1895p, while Rio Tinto was down 21p at 2635p.
Vodafone fell 2% as investors braced themselves for further boardroom battles at the market heavyweight.
Amid reports that key shareholders will vote against the re-election of several directors at next month’s AGM, Vodafone shares were off 3p at 117.5p.
Alliance & Leicester had a mixed session after revealing a sharp improvement in its share of the mortgage market but added that unsecured lending had slowed markedly. Shares closed 10p lower at 1154p, after spending much of the session in positive territory.
Other financial stocks were not faring so well with banking groups Barclays, HBOS and Lloyds TSB and insurers Prudential and Royal & Sun Alliance all off around 1%. Legal & General was one of the worst affecting, slipping 2.5p to 120.75p, while Amvescap eased 9p to 468.5p.
Outside the top flight, shares in H Samuel jeweller Signet were up 3% or 2.75p to 98.75p, after confirming speculation at the weekend that it was talking to US rival Zale Corporation about a potential merger. Two thirds of Signet’s sales already come from the US.
And shares in retirement homes builder McCarthy & Stone lifted 5p to 869p following reports that private equity groups Augusta Capital and Permira are both interested in a takeover.
Elsewhere, hopes of a takeover battle for conservatory maker Ultraframe lifted shares in the troubled company by 14% or 4.25p to 34p.
Double glazing millionaire Brian Kennedy made an offer for Ultraframe on June 2 but discovered today that US investment firms Resilience Capital Partners, a turnaround specialist, and Berggruen Holdings, were mulling a rival approach.
The biggest Footsie risers were British Airways up 5p at 436.5p, Centrica ahead 3.75p at 282.75p, Rolls-Royce up 4.75p at 391p, Man Group ahead 25p at 2367p.
The biggest fallers were Vodafone down 3p at 117.5p, Legal & General off 2.5p at 120.75p, PartyGaming down 2.25p at 113p and Amvescap off 9p at 468.5p.