Several high-profile stocks were on the front foot today buoyed by bid speculation and a series of positive broker upgrades.
The attention of the market was on the likes of Argos owner Home Retail Group and insurance fund firm Resolution, despite a lack of impetus in the overall FTSE 100 Index.
The Footsie finally closed 1.4 points lower at 6364.7 after drifting in negative territory for much of the day.
The second tier was also in the spotlight after strong gains for Durex-to-Scholl group SSL International and Carphone Warehouse amid talk of approaches from trade buyers and private equity firms.
In the FTSE 100 Index, Home Retail topped the risers board, up more than 2%, or 11.25p, at 460.25p, as the stock benefited from an upgrade by Citigroup, as well as ongoing speculation that the Argos and Homebase operator could attract a takeover approach.
Resolution, the UK's largest manager of closed life assurance funds, recovered recent losses as it benefited from a JP Morgan note to rise 9p to 634p. Other insurers also had encouraging sessions, with Prudential up 12,5p at 744.5p, Norwich Union owner Aviva ahead 10p at 765.5p and Standard Life 2.75p stronger at 318.75p.
Dulux paint firm ICI also made early gains following its 7% rise yesterday evening, when rumours of a potential £7.4bn (€11bn) bid from US firm Dow Chemicals swept the market. The firm's shares climbed another 2% today but slipped back as the session wore on to stand 1.75p lower at 538p.
Companies turning ex-dividend, meaning the buyer of the shares is not entitled to the latest dividend payment, accounted for the four biggest blue-chip fallers. Alliance & Leicester was down 38p at 1117p, FT and Penguin publisher Pearson off 19p at 863p, Hanson off 15.5p at 814p and Kingfisher down 5p at 277.5p.
In the second tier, shares in SSL - often linked with a potential bid from consumer products rivals or private equity - were up nearly 7% with a gain of 26.25p to 426p, easing back from a gain of 13% earlier in the day.
Carphone Warehouse was also on the front foot, with shares up nearly 5%, or 13.25p, to 292.75p, amid rumours of a private equity deal and a potential management buyout headed by chief executive Charles Dunstone.
Troubled music retailer HMV also made gains as bargain hunters gathered around the stock, up 6.25p to 113.75p, amid vague takeover talk.
Housebuilders rose amid renewed hopes of fresh consolidation activity. Merrill Lynch sparked the latest wave of action as it said there was a strong possibility that Persimmon will counterbid for Taylor Woodrow, rivalling the company's existing tie-up with George Wimpey.
Woodrow stood 8.75p higher at 502p. while Bovis Homes lifted 20p to 1187p.
Waste disposal group Biffa moved in the opposite direction - down 22.25p at 329p - after warning that profits would be towards the lower end of market expectations.
The biggest Footsie risers were Home Retail Group up 11.25p at 460.25p, Prudential ahead p 12.5p at 744.5p, Resolution up 9p at 634p and International Power ahead 5.75p at 417p.
The biggest Footsie fallers were Alliance & Leicester off 38p at 1117p, Pearson down 19p at 863p, Hanson off 15.5p at 814p and Kingfisher down 5p at 277.5p.