Takeover chatter fails to lift market

LONDON FTSE 100 CLOSE 5,794.53 -13.92

Takeover speculation surrounding a raft of blue-chip stocks was not enough to weaken the impact of a stronger dollar on commodity shares yesterday as the London market edged lower.

Traders piled into fashion house Burberry as bid rumours resurfaced following yesterday's British Fashion Awards, with US designer Coach mooted as a potential interested party. Burberry shares were up 2.3 per cent on the day to close at 1,156p.

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There was similar interest in medical devices firm Smith & Nephew, which was at the top of the risers board with a 9 per cent rise to 662p, after reports cited an 800p per share cash offer from a US consortium of private equity players.

But the strong dollar saw energy and metal prices slide, sending miners lower. Kazakhmys was down 31p at 1,523p, Rio Tinto was off 135p at 4,370p and Eurasian Natural Resources fell 13.5p to 931p.

Positive manufacturing data from the CBI lifted the pound, which was up against the dollar at $1.57 and up against the euro at $1.19.

Investors were unimpressed by ongoing in-fighting between shareholders at Capital Shopping Centres. Shares in Capital fell 5 per cent, or 21.8p to 386.2p. Potential bidder Simon Group said it was still interested in buying Capital, but threatened to drop any potential offer unless it was allowed to carry out due diligence.

Corporate earnings provided the focus in the FTSE 250 with Comet parent Kesa Electricals dropping 2.3p to 169.6p after it reported a three-fold increase in UK half-year losses as second-quarter sales slumped 10 per cent.

Shares in video games and consoles retailer Game Group plunged 7 per cent after it warned profit margins would be hit as it runs more promotions to reverse falling sales. Game said like-for-like sales in the UK and Ireland were down 7.6 per cent in the 18 weeks to 4 December, compared with a 16.2 per cent decline in the first half.

Shares in touchscreen technology group Zytronic rose by 20p to 192p after it posted a jump in full-year sales and revealed record orders of 19.8m compared with 16.1m the year earlier.

Property investment group Helical Bar rose 4p to 281p after it said it was raising money to fund "new compelling opportunities" in the real estate sector. It said it had already received strong indications of support from existing shareholders and other institutions.

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Building services firm Carillion rose 16p to 371p after it said it expects to deliver continuing good growth in profits in 2010.

It has signed up 1 billion worth of contracts for future work and expects to benefit from local authorities outsourcing work to cut costs.

International Greetings, which makes gift wrap, Christmas crackers and cards, rose by 4.5p to 71p after doubling its pre-tax profits in the six months to 30 September.Sales were up 13 per cent to 104.5 million and profits from continuing operations were up 110 per cent to 2.1 million.

Property developer Terrace Hill Group, which has a number of interests in Scotland, rose 4.5p to 71p after returning to profit in the 11 months to 30 September.