Murdoch bid talk fuels BSkyB

SHARES in BSkyB were in strong demand yesterday on market talk that Rupert Murdoch's News International might move to take the group private.

News International, which also owns the Sun newspaper, already controls 39 per cent of the pay-TV broadcaster, and was rumoured to be mulling a 735p a share bid for the rest of the stock.

BSkyB declined to comment on market speculation, but shares in the FTSE 100 group rose 5 per cent or 28.5p to 598p, making it the best performer in the index.

On a light news day, the wider FTSE 100 edged 8.4 points higher to 5,625.7, following news that retail sales rose by 0.3 per cent month-on-month in February, despite heavy snow. The mid-cap FTSE 250 closed up 87.12 points at 9,941.56.

Yesterday's close was the latest in a string of modest rises or falls, but traders said this week might still prove significant. James Hughes, at CMC Markets, said that a 30-point gain for the week saw the index rise through some key levels, adding to last Friday's 18-month high.

He added: "It seems that the strength in equity markets is far from dying away and we could well see US markets follow suit by breaking their January highs."

The pound gained ground against the dollar despite the retail figures, trading above $1.52 against the greenback at one point. Sterling was steady at 1.1 against the euro.

Blue-chip banks made strong gains yesterday as the sector followed the lead of US counterparts on Thursday night, on hopes that the United States will water down its banking crackdown.

Talks had broken down on Thursday in the US over American government plans for tighter bank regulation, prompting suggestions that they will end up being less onerous.

Part-nationalised Royal Bank of Scotland and Lloyds Banking Group led the sector's gains, as they were also reported to be among those lined up to handle a bond issue to raise several hundred million euros for one of the world's big commodities traders.

RBS rose 2p to 42.6p, while Lloyds was 1.9p dearer at 58.5p. Barclays followed with a gain of 8.1p to 351.85p. HSBC was an exception to the rule as Goldman Sachs cut its rating on the shares to "neutral", removing the bank from its closely watched "conviction buy" list. HSBC shares eased 10.6p or 1.5 per cent to 684p.

Standard Life, the Edinburgh-based insurance group, was also among the fallers, as traders took profits after recent rises boosted by strong results and share buying by its directors. Shares in Standard Life dropped 3.2p to 211.6p.

British Airways closed 2 per cent higher at 235.6p, despite confirmation that cabin crew strikes will take place later this month.

Retailer Marks & Spencer was also on the up for a second successive session – gaining 4.4p to 358.1p – after fellow retailer John Lewis followed its strong full-year results by posting another healthy weekly sales update.

Up-market cooker maker Aga Rangemaster dropped 2p to 118p as investors focused on last year's profit slump despite an encouraging trading outlook.

Nightclub operator Luminar was down for much of the day after it said the cold snap had added to the recent pressure on sales, down 9.9 per cent on a like-for-like basis over its full-year. Shares bounced back later to finish 0.75p ahead at 36.25p.

Waste disposal firm Shanks suffered another day of losses in the FTSE 250, off 4p to 100p after confirmation on Thursday that private equity suitor Carlyle Group had ended talks and would not pursue an offer.

Axis Shield, the Dundee-based medical diagnostics company, rose half a penny to 391p, despite analysts at Execution Noble cutting their rating on the shares to "hold" from "buy".