Market report: Rumours of Asian predator put C&W in the spotlight

CABLE AND WIRELESS fell under the spotlight yesterday as the market chased the next bid target in the consolidation-mad telecom sector.

The phone group was one of the best performers in a solid FTSE 100, rising 41.5p to 776p, as wired up traders heard stories of a foreign strike.

The rumour that an overseas predator could soon be stalking C&W is nothing new. The names of Deutsche Telekom, France Telecom and the US giants Bell Atlantic and SBC have been on the market's lips for some time. The new element to the story was that the mooted predators could be pipped to the post by an Asian rival.

The Far East dealing rooms are apparently awash with talk that the Hong Kong conglomerate Hutchison Whampoa is having a look at some of C&W's assets.

The rumour has a certain logic. Hutchison is soon to receive a huge wad of cash from the sale of its 44 per cent stake in Orange, up 151p to 1,845p. The mobile operator's price is rising by the minute as the shares in its predator Mannesmann soar on hopes of a mega-bid from Vodafone, 3.75p lower to 292.5p. At the last count, Mannesmann's cash-and-share offer for Orange is worth some pounds 20bn, leaving Hutchison with a pounds 8.8bn windfall.

The Hong Kong giant is keen to spend the money to beef up its domestic telecom network.

Only yesterday, Hutchison puts its fixed-line phone business into a $1.2bn joint venture with fibre-optic cable group Global Crossing and said that it wanted to expand in Hong Kong and China.

C&W has just what Hutchison wants, as it owns a large stake in Hong Kong Telecom, the former colony's leading operator which is seen as the best launchpad into the huge Chinese market.

The Asian predator could easily pick up HK Telecom and the UK's group Internet business and leave the European operations to C&W's Continental suitors.

Remaining telecom issues were predictably excited by the Vodafone/Mannesmann saga. BT, a potential Mannesmann "white knight", rang up a 46.5p rise to a record 1,286p, while bid target Energis added 111p to a best-ever 2,406p. Even AIM tiddler World Telecom rose 32p to 98p after revealing offer talks.

Phone stocks were largely responsible for keeping the market in positive territory despite growing jitters over today's US interest rate decision.

The FTSE ended the session 22 higher at 6,533.6 - fewer than 100 points from its all-time high - even though the Dow opened lower on fears of a rate hike.

Financials were another sector in demand. The Woolwich cashed in a 14.75p rise to 366.75p amid whispers that if Alliance & Leicester, up 1.5p to 889.5p, does not want to merge, it might turn to insurer Norwich Union, down 6.5p to 463.75p.

Rival Prudential moved 22p higher to 1,071p on vague talk of corporate action, possibly involving its web bank Egg.

Barclays jumped 70p to 1,943p on its cost-reducing branch closures and perennial bid talk.

The Halifax bucked the trend, slumping 30p to 715p as an institution dumped a large line of stock on worries over tough trading and lack of deals. NatWest lost 3p to 1,360p even though a bid from Royal Bank of Scotland, down 2p to 1,324p, is thought to be near.

Engineer Invensys was hoisted 15.5p higher to 311.5p on talk of good figures and further disposals to be unveiled next week.

Returning talk of a strike pushed Sainsbury 5.75p higher to 355.5p. Rival Somerfield rose 7.5p to 98.5p on rumours that entrepreneur Philip Green was accumulating a stake.

Gas group Centrica, up 1.25p to 175.75p in big volume, was caught up in a tug-of-war between two fund managers. MAM was said to be the buyer, PDFM the seller.

British Aerospace nosedived 15.25p to 380.5p on whispers of a missile alliance between Nordic rivals Celsius and Saab. Glaxo Wellcome plunged 57p to 1,824p as dealers fretted about today's meeting with the US regulator on its anti-irritable bowel syndrome drug Lotronex, a potential best-seller, and Wednesday's trading update.

The junior indexes were in good nick as a soaring Nasdaq triggered a rally in the hi-tech sectors. The midcap ended 59 better at 5,977.8, while the Small Cap rose 22.8 to 2,809.5.

Pace Micro, the maker of digital TV decoders, buzzed 65p higher to 385p on hopes of new deals. TV maker Alba beamed 22p higher to a record 426p on talk that its new TV with in-built digital box will soon be available in shops.

Chip-maker Imagination Technologies rose 53.5p to a record 341.5p amid talk that the board was meeting late last night, possibly to agree a deal.

Trafficmaster motored 105p ahead to a record 750p on speculation of deals in France and Italy for its vehicle tracking system. Aerospace group Meggitt shot 11.5p higher to 158.5p. A new contract and a disposal are said to be near. Dairy group Unigate milked a bid rumour and a share buyback to move 23.25p higher to 300p, while hotel group Swallow flew 12p higher to 268.5p on rehashed talk of a deal.

Cash shell Rodime was the star of the tiddler's. The stock tripled to 3.75p on rumours of an Internet deal, even though the company denied any knowledge of it.

Broker Teather & Greenwood soared 140p to a record 737.5p on good figures from rival Charles Stanley, 285p higher to 1237.5p, and vague bid talk, while AIM-listed marketing group 10 Group was flat at 3.06p despite whispers of a deal with Internet investor Durlacher, unchanged at 722.5p.

Oil driller Bula slipped 0.75p to 3p in huge turnover. A large deal should be around the corner.

f.guerrera@independent.co.uk

SEAQ VOLUME: 1.9bn

SEAQ TRADES: 112,498

GILTS INDEX: 108.12 -0.05

THE HOT MONEY is piling into Pacific Media amid growing whispers of a large deal.

Pacific Media, an operator of cinemas in the Far East, yesterday starred in the junior AIM market with a 0.4p rise to a 12-month high of 1.86p.

Rumour has it that a large media company is looking to spin off one of its subsidiaries and list it on the market through a reverse takeover of Pacific.

THE INTERNET sector could soon be boosted by a new arrival. The US-based Auction Channel is looking at floating in Europe over the next few months. The company has a unique system which allows punters watching an auction on TV to bid for items through the phone or the web. The system will be put to the test on 20 December when www.theacutionchannel.com will host Christie's first ever on-line auction - a collection of toy trains.