Market Report: Praxair bid talk sets Johnson Matthey alight

On a topsy-turvy day for the market, takeover talk was once more at a premium. While the top tier ended the day down, Johnson Matthey, the blue-chip chemical company, bucked the trend after late bid speculation.

It soared 9.92 per cent to 1,840p, the strongest performer of the day after rumours that the Fortune 300 company Praxair was preparing to come in with a £20-per-share bid.

There were only five stocks in positive territory by the close, despite the market being within touching distance of seven-year intra-day highs in the morning.

BP initially topped the leaderboard as oil prices soared, hitting record highs on both sides of the Atlantic by the close. Although the stock retreated in the afternoon, it finished up 0.57 per cent to 622.5p. Shell was another beneficiary, finishing the day 1.08 per cent stronger at 2,062p.

The FTSE 100 slumped in the afternoon as the Dow gave up more than 100 points on the back of disappointing third-quarter results from Citigroup. London ended the day down 86.2 points at 6644.5.

Elsewhere in the US, the rumours re-emerged that Icelandic investment group Baugur was set to bid for Saks Fifth Avenue, with an offer worth between $26 and $30 a share imminent.

Worst performer among the blue chips was Northern Rock, which lost a fifth of its value to close at 216.2p. This followed a couple of screaming "sell" notes, with Collins Stewart especially bearish. It said "irrational exuberance" meant the stock was overpriced and reiterated its 130p standalone value. The insurer Legal & General was also hit by unfavourable broker sentiment, falling 4.44 per cent to 135.5p after JP Morgan said the sell-off in the stock was not yet over. Aviva followed it down, giving up 4.59 per cent to 747.5p. Investors in Friends Provident got the jitters yesterday over reports that its proposed tie-up with Resolution could collapse. The stock fell 3.26 per cent to 175.1 as Swiss Re confirmed it was in talks with Standard Life over buying parts of Resolution.

Profit-taking knocked brewer SABMiller after an in-line trading update. While lager volumes rose 11 per cent, the growth in revenue was partially offset by higher costs and increased investments across the business. Simon Denham, managing director of Capital Spreads, said the group had suffered the "curse of the expected numbers syndrome", closing down 4.72 per cent at 1,413p.

The trading platform provider QXL Ricardo continued its strong performance in October, closing as the FTSE 250's highest riser yesterday. The group rose 4.58 per cent to 1,255p, as the market looked forward to its first-half figures on Thursday.

After bid speculation had re-emerged in Alfred McAl-pine on Friday, the stock was in focus again. Yesterday, traders were hearing that a potential suitor could be looking just at a division of the building services group rather than a full takeover. It closed up 10p at 532p.

The private equity group Candover Investments was up 1.88 per cent to 2,170p as it confirmed it was still in discussions with Stork, the Dutch group, and one of its shareholders LME, "to look at an alternative transaction that takes into account the interest of all shareholders involved".

Reports said Apax Partners, another buyout firm, had teamed up with Guar-dian Media Group to launch a bid worth about £1.2bn for Emap. The publishing group zigzagged up 14.5p, down 17.5p, before settling 14.5p lower at 909.5p.

Bottom of the second string was Rank Group, with brokers lining up to bash the stock after Friday's profit warning. ABN Amro, Daniel Stewart, Investec and Merrill Lynch all downgraded their ratings. Daniel Stewart said the "woeful trading update" confirmed its predictions that the group would suffer from the smoking ban and the gambling act in the UK. It lost 12.2 per cent to 109.75p.

The air conditioning and heating group Worthington Nicholls was down 10.87 per cent at 20.5p after announcing it had to write off £6.5m after an accounting review. There was also news that chief executive Mark Worthington would step down with immediate effect.

Investors switched off Apace Media in their droves – it fell 8.89 per cent to 10.25p. This was after Albanian broadcaster TVA, in which Apace has a stake, had its licence revoked by the national regulators. Apace added it had taken a stake in TVA "in the full knowledge that this was a speculative investment".

The security glass group Pentagon Protection rose almost 15 per cent to 1.35p on news that two UK blue-chip companies were trialling its energy efficient membrane for glazing.

Music Copyright Solutions was making sweet music on AIM, after it announced the acquisition of Frank Catanzaro's back catalogue. The stock was up 8.33 per cent to 32.5p.