Asos surges as City gossips find a suitor for it in Amazon

City chatterboxes claimed that the titan of internet shopping, Amazon, could be eyeing up the AIM-listed group and mentioned a price tag of £22-a-share.

"Asos has been doing staggeringly well," said one market gossip. "Amazon would be paying up and looking big - grabbing Asos before anyone else does." Although conceding that Asos looks expensive on ordinary measures, he added: "Asos is no ordinary company - it is a brilliant growth story."

Asos, whose site is a favourite shopping haunt of teen and 20-something style lovers, has recently launched country-specific sites in the USA, Germany and France to increase conversion from browsing to sales. UBS flagged up Asos as a bid target this month. Danish fashion chain Bestseller recently upped its stake in Asos to more than 18% but says it has no plans to make a full-scale bid for the company. Asos shares climbed 80p to 1580p.

Its bricks and mortar rivals had a tougher time, however. After H&M posted a drop in quarterly profits and said margins were being squeezed by rocketing cotton prices, Britain's clothing chains suffered a sympathy slide. Next dropped 40p to 2045p, Primark owner Associated British Foods was down 8p at 1091p and Marks & Spencer slipped 2.3p to 363.7p.

J Sainsbury benefited from takeover talk, amid renewed speculation that the Qatari royal family was mulling a bid. The grocer's shares jumped 6½p to 378¼p.

London's blue-chips suffered as the market opened after ratings agency Standard & Poor's cut Japan's credit rating. However, the FTSE 100 recovered by midday, rising 17.43 points to 5986.64 as gains from miners offset losses from retailers.

Randgold Resources took pole position on the leaderboard, surging 231p to 4970p after HSBC raised its rating on the shares to "buy". Precious metals miners were also benefiting from their "safe haven" status, with Mexico's Fresnillo gaining 57p to 1387p.

What are shares in Heritage Oil really worth? That was the big question of the day as the oil explorer - now called "Heritage Gas" by city wags - clawed back a little of its losses. Heritage - which slid 30% yesterday after announcing a huge gas find at its Miran structure against expectations of oil - jumped 19.9p to 329.9p today.

Talkative types claim the sell-off might have left Heritage looking tempting to a suitor. "This could turn out to be the steal of the century," said one fan of the stock. "People are forgetting that Miran isn't its only asset. I think Heritage may end up selling Miran but I wouldn't rule out an approach for the company either."

Another added: "Heritage was hammered yesterday afternoon on margin calls. Some investors have rushed in today to make a quick buck, selling swiftly, while others are buying with a more long-term view."

But analysts were divided. The City's pointy-heads variously decreed Heritage's shares should hit 700p (Evolution), 375p (UBS) and fall to just 320p (Arbuthnot). The biggest bear - Arbuthnot's Dougie Youngson - lowered his rating from "strong buy" to "sell", saying he was sceptical about the health of the global gas market.

Sterling Energy rocketed 8¾p to 73¼p as the energy explorer said that it will re-drill a well in Kurdistan. The company has not managed to retrieve the whole of a broken drill pipe.