Market Report: BSkyB and EMI put on the entertainment

BSKYB and EMI were the market's chief entertainers yesterday as the sound of corporate action grew louder.

Rupert Murdoch's satellite TV giant beamed 14p higher to 583.5p on rumours that talks over a link-up with its French rival Canal Plus could soon resume.

The whispers of a tie-up between the leading players in Europe's pay- per-view market were triggered by news of the merger between French utility Vivendi and the media group Pathe. The mega-deal will see Pathe's 17 per cent stake in BSkyB transferred to Vivendi. The whole thing would be just a bit of Gallic share reshuffling were it not for the fact that Vivendi owns 34 per cent of Canal Plus.

According to market wisdom, the new structure puts the French in a much stronger negotiating position vis-a-vis BSkyB. The UK company, where Mr Murdoch's News International controls a near-40 per cent stake, broke off talks with Canal Plus in March because the French wanted management control.

However, the change of chief executive at BSkyB and yesterday's arrival of new masters at Canal Plus could see the negotiating table being wheeled out again.

Music group EMI was also on song as talk of a takeover returned. The battered stock climbed 22.75p to 463.25p - the biggest blue-chip riser of the day - as speculative buyers sniffed an overseas bid.

The list of likely buyers includes Canadian drinks and leisure giant Seagram, German media giant Bertelsmann and the US powerhouses Time Warner and even Disney.

Poor old EMI, with its weak artists' roster and lacklustre markets, has been in the bid spotlight for some time, and the dealing boys say a deal is edging closer.

EMI's virtuoso performance was helped by a raft of deals at above-market price just before the close.

The rest of the market was good but not exceptional. The FTSE 100 closed 50.5 points up at 6,412 on the back of a sharp rise in Wall Street and domestic bid activity. However, the rally was restrained by fears of monetary tightening ahead of Thursday's interest-rate decision.

Takeovers, real or imagined, were one of the key props for leading blue- chips.

BG soared 16.75p to 372.5p on heavy volume after the much-rumoured pounds 18bn bid from Shell, up 7.5p to 475.25p, was given another spin by the weekend press.

Energis was a new arrival on the market's bid wish-list. The telecoms group rang up a 65p rise to 1,620p on talk of a pounds 6bn strike from Deutsche Telekom. Orange, another mooted target for the German giant, jumped 26p to 899p. There were talk that the UK cellular group wants to buy out its partners in the E-Plus German mobile phone venture.

Cable & Wireless, still willing to sell One2One, closed 11p higher at 802.5p after receiving a pounds 700m offer from financial buyers for its 20 per cent stake in French operator Bouygues Telecom.

The sector bid excitement spilt over to Colt Telecom, which was 50p higher at 1,263p on vague whispers of a deal.

Vodafone was immune from bid talk, but rose 55p to 1,282p on hopes that today's results will be very good, while BT firmed 8p to 1,099p on talk of a mystery deal.

SmithKline Beecham shot 24.5p higher as Lehman went positive on drugs, while talk of a merger with Novartis or Glaxo, up 36p to 1,847p, did the rounds. Royal & Sun moved 8p higher to 533p on vague speculation of a strike by Germany's Allianz or Italy's Generali. BAT puffed 25.5p higher to 627p as trackers moved in after completion of the Rothmans takeover.

Dixons' confirmation that it is to float part of web provider Freeserve prompted a 47p spike to 1,236p. ITV group Granada reacted with its own free Net service and the shares buzzed 43p higher to 1,304p.

No such luck for Reed. The beleaguered publisher fell 27.5p to 453.5p after issuing the profits warning it had denied a couple of weeks ago. A bid for the Anglo-Dutch group is seen as more likely. Generator National Power blacked out 13.25p to 492p on fears that it is out of the running for South Western Electricity.

A raft of takeover rumours underpinned the smaller stocks. The mid cap ended 30.6 points higher at 5,771.5, while the Small Cap was up 11.9 at 2572.7.

Security group Williams confirmed the rumoured approach from US rival Tyco and locked in a 56.75p rise to 444.75p. This might be enough to push it back into the FTSE 100 after tomorrow's review.

Computer group ITnet could fall out of the mid cap, although yesterday's 22.5p rise to 357.5p, after winning an outsourcing contract for London Transport, could prevent relegation.

Sugar group Tate & Lyle stirred 31.5p higher to 439.5p on talk that a rival - maybe AB Food - could take it over. Rugby Group, the cement maker, built a 7p rise to 120p on revived bid talk and hopes of a sale of its joinery division.

Returning takeover whispers pushed Safeway 3.25p higher to 254p. Lex, the road assistance company, accelerated 30p to 620p on continued talk of a bid by Ford. Its shareholders also approved the pounds 437m buy of the RAC. Publisher Informa soared 19p to a high of 393.5p after broker Henderson said "buy".

Poor trading fears sent JJB Sports 25p down to 292.5p, while all-conquering British Steel fell 11.5p to 150.25p as investors disapproved of its dividend policy after the takeover of Hoogovens.

Media tiddler Aspen rose 8p to 50p on reception of a 52p-a-share management buy-out. Sinclair Montrose, the healthcare specialist, jumped 18.5p to 138.5p after revealing "advanced bid talks". Retailer Gieves put on 5p to 37.5p after announcing the demerger of its Chivers publishing unit. Finance house London Forfaiting climbed 6p to 55p on takeover talk, while London Clubs jumped 9p to 140.5p on talk a bid is close.

SEAQ VOLUME: 986.4m

SEAQ TRADES: 73,836

GILTS INDEX: 107.1 +0.49

SPECULATIVE buyers are piling into Emerald Energy. The oil minnow jumped by 0.5p to 4.25p in gigantic volume of over 14.6 million shares amid growing optimism on one of its key projects. The market is expecting a positive drilling report on a couple of Emerald's oil drilling ventures in Colombia. The company has so far been tight-lipped on chances of finding oil in the two fields, but an announcement is expected soon.

ANOTHER TINY company jumped on the Internet bandwagon. Public Network debuted on the junior Ofex with a 7.5p rise to 37.5p. The group aims to cash in on the Web craze with coin-operated computers in public places. The terminals, which will allow Net access, are to be installed in supermarkets, pubs hotels and hospitals. The group has developed a beginner service allowing web illiterates to go online for as little as pounds 1.