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The £10 billion battle for control of Cadbury, 5p cheaper at 792½p, is now warming up, but the City is looking around for the next Footsie 100 target.
Centrica continued to attract speculative support with the price climbing 3.4p to 260p. The word doing the rounds in the Square Mile yesterday claimed Russia's Gazprom was back in the frame and prepared to make an offer worth 400p, which would value the British Gas group at £20 billion.
Household products group Reckitt Benckiser also surged close to the top of the leaderboard with a jump of 97p to 3203p on talk it may want to merge with Colgate Palmolive in the US. Such a move would create a business with a price tag of around £45 billion.
Traders said that while they would never rule out a bid for a blue-chip company in the present environment, this latest bout of speculation may have been thought up by Harry Hedge Fund and his mates. They already have a sizeable position in Cadbury and may be hoping to repeat the success by building up stakes elsewhere.
Shares generally were finding the going difficult. A softening of commodity prices prompted a sell-off among the miners and that, in turn, acted as a drag on the rest of the market. The FTSE 100 index fell 35.43 to 5306.70.
The gold price showed signs of sliding after coming within a whisker of its record high of $1152 an ounce, set yesterday, on the back of a stronger-than-expected US consumer prices index.
It was later affected by a rally in the dollar and settled at $1140. That, in turn, hit mining shares. Randgold Resources fell 145p to 4858p, Anglo American shed 97p at 2534p and Rio Tinto shed 94p at 3217p. Also beating a retreat were Fresnillo, down 29p at 891p, Antofagasta 45½p at 895½p, and Xstrata 35p at 1092p. Shares of Metals Exploration, where Christian Candy — one half of the Candy property empire — owns a 44% stake, came back from suspension 2p lower at 16¾p. The miner has issued a resource update for its Runruno gold-molybdenum project in the Philippines. The original indicated estimate of 270,000 ounces of gold has more than doubled to 560,000. But the inferred estimate has plunged from 1.24 million to ounces to 650,000.
Elsewhere among the leaders, BG Group stood out rising 9p to 1147p on the back of record productivity from tests on the Iracema appraisal well in the Tupi field, offshore of Brazil.
Lavendon, up 2p at 93¼p, is raising £80.8 million by way of a heavily discounted placing of 38.4 million shares at 70p. It wants the money to reduce debt. The company is being charged fees of just over £4 million by its advisers Investec and Altium.
Brokers are split over British Land, down 5¾p at 489½p. Exane BNP Paribas raised its rating on the property developer from neutral to outperform, rival Société Générale has trimmed its target from 550p to 540p but continues to rate the shares a buy and Evolution Securities has reduced its rating from buy to add. The shares have endured a helter-skelter performance this year already, dropping to a low of 300p in March before rallying to 530p by August. Developers have seen debt levels soar during the recession as the value of share prices plummets.
