Brewer Scottish & Newcastle saw its shares enjoy a late surge today on rumours of possible bid interest from Heineken or Carlsberg.
The stock jumped by more than 12% in afternoon trading, helping to drive the London market further into positive territory.
A strong opening on Wall Street as US shares recouped some of yesterday’s losses boosted the FTSE 100 Index, which closed up 57 points at 6324.2.
Scottish & Newcastle topped the risers board with a gain of 64p to 595p, while positive trading updates saw further strong advances from Compass and Tate & Lyle.
Sugar group Tate & Lyle closed up more than 5%, or 29p at 573.5p, after it pleased investors with news that trading since its profits warning in January had been in line with expectations.
It also said that it would update the market on its review regarding the possible sale of its European ingredients business in a few weeks.
Catering giant Compass lifted 5%, or 15.75p to 335.75p, after analysts upped their target price for the stock on the back of faster-than-expected progress on improving profits in its core catering business.
More takeover speculation in the tobacco sector also lifted Lucky Strike maker British American Tobacco 22p to 1592p, amid reports that it is in talks with private equity groups regarding a possible bid for Spanish cigarette maker Altadis.
Imperial Tobacco, whose £7.8bn offer was spurned by the Altadis board, lifted 39p to 2283p, on renewed rumours that it is close to raising its bid for the group.
Meanwhile shares in BAE Systems rose 11.25p to 461.25p after defence contractor VT Group reported “good progress” on its shipbuilding joint venture with the firm. VT was ahead 21p at 492p.
B&Q owner Kingfisher recouped some of it earlier losses to see its shares close down 0.5p at 270.5p after the group forecast a brighter outlook for the DIY market and its results marginally topped analyst expectations. However the optimism was not enough to offset an 11% fall in pre-tax profits to £396.6m in the year to February 3.
Fashion chain Next was the biggest blue-chip faller of the session – down 112p to 2241p – after speculation over a potential private equity bid began to subside.
Broadcasting group BSkyB slipped 4p to 563p after HSBC downgraded the stock, warning that the battle to protect its leading position in the pay-TV market would impact future earnings.
Electricity group National Grid slipped 1p to 787.5p as a trading update revealed capital expenditure had been higher than forecast.
Elsewhere, Spanish restaurant group La Tasca gained more than 6% after Robert Tchenguiz and Icelandic bank Kaupthing tabled a £98.6m offer for the business. The bid rivals Tragus’ recommended £96 million bid announced yesterday. The stock was up 12p at 195p.
The biggest Footsie risers were Scottish & Newcastle up 64p at 595p, Tate & Lyle ahead 29p at 573.5p, Compass Group up 15.75p at 335.75p and Man Group ahead 22p at 565p.
The biggest Footsie fallers were Next off 112p at 2241p, WPP Group down 9.5p at 772p, Kelda Group off 10p at 935p and ICap down 4.25p at 523.75p.