THE appearance of two more bids was exactly what the London market needed yesterday to offset the impact of economic news, regarded as increasing the chances of a rise in British interest rates next month.
The two new cash bids, coming hard on the heels of offers for Newman Tonks and Burnfield, rekindled the market's enthusiasm in hunting for the next takeover candidates and drove all the main indices sharply higher.
The FTSE 100 index left 4,000 behind, spiralling upwards and eventually closing 38.6 higher at 4,018.2. The FTSE Mid-250 gained 16.5 to 4,380.5 and the FTSE SmallCap 8.9 to 2,140.6.
International news was also positive. The US Federal Reserve's Open Market Committee left interest rates unchanged, giving a fillip to Wall Street on Tuesday. The Dow Jones Industrial Average gave another powerful performance yesterday, pushing up a further 35 points well after London closed.
Entergy's £1.3 billion sterling agreed bid for London Electricity came as no real surprise, having being widely predicted in the press.
But the £432 million offer for Clyde from Gulf Canada Resources came out of the blue, and triggered a general scramble for the exploration stocks. The hostile bid heightened expectations in a sector already undergoing something of a re-rating after the "top-dollar" purchase of Sante Fe, a big North Sea operator, some weeks ago.
With Clyde shares moving well above the 105p a share bid, the market anticipates a battle developing for what is regarded as one of the few remaining quality stocks in the sector. Enterprise Oil is viewed as a likely counter-bidder, while British Borneo is seen as the sector's next potential target.
Helping fuel the market's morning rise was at least two trading programmes. One, said to be valued at £60 million sterling, was weighted equally between purchases and sales but the other, estimated to have been around £150 million, was said to have been heavily biased on the buy side.
Dealers were increasingly convinced that at least one sizeable financial sector bid or merger would shortly hit the market. Abbey National was being aggressively bought, despite the company's recent insistence that it is not involved in any form of merger/acquisition talks. The composite insurers were again in demand, with General Accident in receipt of a buy recommendation from Cazenove.
All this meant that the market was able to ignore a sharp fall in unemployment and strong retail sales figures.
Turnover was boosted by the trading programmes to reach 930.6 million shares at the 6 p.m. reading, the heaviest business for many weeks. Customer business on Tuesday was valued at £1.16 billion.
The big upturn in business was also seen on the Tradepoint dealing system which enjoyed its best ever trading day, turning over in excess of £32 million worth of shares, including £20 million worth of Lloyds Abbey Life shares via what was seen as an arbitrage deal.
