Market Report: Bid hopes dial up Vodafone shares

Vodafone dialled the festive number. Helped by a round of share tips and the inevitable stories of a US strike the shares climbed to a 450.5p high with a 12.5p gain. Trading was brisk.

Merrill Lynch and HSBC provided the investment nudge. US buying rekindled the take over thoughts with the likes of American giant AT&T in the frame.

The mobile telephone group has climbed from a 240p low this year. Its performance has been due in part to its increasing subscriber base both at home and overseas which, it is generally agreed, ensures strong medium term growth.

Takeover hopes, however, have been a big inspiration. In the global telephone scene Vodafone looks one of the most enticing prizes. BT, with its control of the Cellnet network, would stand little, if any, chance of clearing monopoly hurdles. But an overseas group could succeed and if AT&T stays at home there remains a host of potential candidates.

Vodafone also contributed to its pre-Christmas cheer by declaring it had finalised lifting its stake in Francaise du Radiotelephone, the French mobile network, to 20 per cent from 16.1 per cent.

Orange, however, pipped Voders to the top of the blue chip leader board. It gained 14p to 264p although the advance looked unrepresentative, no doubt the result of order driven trading.

The rest of the market was back in winning festive ways with Footsie scoring a 31.6 points gain to 5,049.8, despite an uncertain New York opening and more distress in Korea. A $12bn take over spree in the US helped sentiment

Another Footsie change gave tracker funds something to think about. Only a couple of days after being relegated Blue Circle Industries was reinstated. Its swift return was due to Mercury Asset Management's departure as Merrill Lynch's bid for the fund manager went unconditional, thereby cutting its Footsie return to just two days.

Galen, the little known Ulster drugs group, replaced BCI in the FTSE 250 index. The company came to market at 150p a share in July. It was then valued at pounds 181.9m. With its shares at 324.5p the capitalisation has increased to pounds 393.5m.

Whitbread, the leisure group, was another to stretch to a new high. The shares closed 25p up at 910p (after 924p). They were 695p in November.

The group is rumoured to be contemplating two big disposals to give it ammunition and elbow room to continue its retail build-up.

One story is new chief executive David Thomas is considering retreating from the beerage. The group has always strongly defended its beer heritage but there is a persistent rumour Mr Thomas, who succeeded Peter Jarvis earlier this year, feels there is little point in Whitbread remaining the fourth force in a declining market.

The other possible disposal said to be occupying Mr Thomas is the Thresher's off-licence chain which has been hit by supermarkets and bootleggers. Parisa, the venture capitalist backed arrival on the drink shops scene, is thought to be interested.

Financial shares, on renewed hopes of corporate action, were given another whirl. Lloyds TSB to go for Abbey National was the latest variation of a well worn theme. Helped by the sale of a loan business Lloyds gained 25p to 761p. Abbey put on 41p to 1,069 (after 1,080p).

Sun Life & Provincial improved 22p to 440p as the French giant AXA-UAP cut its stake, as promised, to 71.6 per cent selling 6 million shares.

Rolls-Royce firmed to 228p. Henderson Crosthwaite rate the shares a buy, suggesting profits of pounds 285m this year will grow to pounds 530m by 2,001. Racal Electronic held at 258p with Salomon Smith Barney joining the buy chorus.

Ionica, the under pressure telephone group, recovered a further 9p to 96.5p, encouraged by director buying at 84p. Aegis, the media buyer, was firm at 67p with Seaq turnover approaching 10 million.

Acatos & Hutcheson, the edible oil group, slumped 26p to 259p after a 25 per cent profits fall. Reflec, a reflective inks group, was the day's worst performer, losing nearly 70 per cent to 9.5p following another profit warning. The shares once touched 126.5p.