Takeover talk buoyed medical devices firm Smith & Nephew today, but the wider market remained in the red as Wall Street opened with sharp losses.
The Dow Jones Industrial Average fell more than 70 points soon after opening, mirroring declines across the UK and Europe amid renewed sovereign debt fears and concerns over demand in China.
London’s FTSE 100 Index dropped 33 points to 5951.3 despite Smith & Nephew soaring to the top of the risers board after reports of a takeover approach from US rival Johnson & Johnson.
Smith & Nephew shares leapt 12% – up 76.5p to 726.5p – as speculation suggested its suitor was considering whether to return with a higher offer after a €8.4bn proposal was reportedly rejected several weeks ago.
One analyst estimated the group could fetch £9 a share, valuing it at around £8bn (€9.6bn).
But commodity stocks weighed on the top tier as miners came under pressure amid worries over China’s economy and moves to slow down growth, while Portugal is the latest country to take centre stage in the eurozone debt drama.
Investor attention was also focused on the retail sector after the latest updates from supermarket Morrisons and department store chain Debenhams.
Morrisons impressed analysts after reporting like-for-like festive sales growth of 1% for the six weeks to January 2, slightly better than most forecasts. Shares eased back after earlier gains to stand 0.1p higher at 270.1p.
Debenhams dipped into negative territory, down 0.9p at 73.3p after it estimated the impact of the snow cost it up to 3% in like-for-like sales for the 19 weeks to January 8, leaving same-store sales for the period down by 1.3% excluding VAT.
Online grocery group Ocado was also in the red despite saying it had outperformed market expectations with a 26.7% leap in gross pre-Christmas sales.
Shares declined 6.3p to 179.7p in the FTSE 250, although the stock is also giving back recent gains that have seen it rise to record highs since its controversial flotation last summer.
Elsewhere, Persimmon shares were up 0.9p at 438.6p after the housebuilder said it expected profits to be at the top end of expectations.
The performance defied falls among its builder peers after the latest Halifax house price figures revealed a 1.3% fall during December, which took 2010 declines to 3.4%.
Barratt Developments and Bovis Homes, which provide trading updates on Wednesday and Friday, fell 1p to 92.5p and 4.2p to 423.2p respectively.