Vickers purrs to new high on takeover rumours

The suspicion Vickers, the defence to Rolls-Royce cars group, could soon be involved in takeover action sent the shares purring to a new high, up 11.5p to 300p.

With increasing speculation that Whitehall's resistance to defence company alliances has lost much of its power, the stock market was quick to alight on the likely candidates for corporate action.

Vickers took pride of place. GKN, another hitting a peak, was hopefully identified as the most likely bidder, gaining 22.5p to 1,172.5p.

British Aerospace was another to fly 22.5p higher, to 1,168.5p. It has experienced a love-hate relationship with long-rumoured bidder General Electric Co. Weekend stories that the Ministry of Defence had dropped its long-suspected opposition to any BAe-GEC deal consequently attracted attention. Although a trading link could be the first development, any bid, reasoned some, would not be far behind. GEC rose 7p to 378.5p. Other defence shares to attract attention included Cobham, 18.5p firmer at 588.5p and Vosper Thorneycroft, 23p to 832p.

Utilities were the other dominant stock market influence. A bid for one of the regional electricity companies has been the confident prediction of the men in dark glasses. It seems they may have alighted on the wrong target. Last week they were forecasting that East Midlands Electricity would collect a 700p-a-share offer from a US group. In the event a 630p US bid appeared, but it was directed at Northern Electric, which had already survived a hostile attack from the late Trafalgar House.

Northern, rejecting the US advance, managed somehow, to support the market view that a reasonable uplift in the terms would bring the utility to heel. The Americans took the opportunity to buy 12.7 per cent of their target in the market, making life difficult to any counter bidder.

Meanwhile the jilted East Midlands fell 15p to 545.5p although it is still seen as a US bid target. London brightened 18.5p to 608.5p and Southern 17.5p to 647.5p.

Waters produced a few gains with Thames, figures today, up 7.5p to 545p. South West Water recovered a little from Friday's dousing when Whitehall blocked two takeover bids. The shares rose 20p to 595p.

After stretching to a 15.2 points gain in early trading Footsie found it impossible to keep up its momentum, ending with a 2.9 advance to 4,025.3.

British Biotech continued its revival, adding a further 4.5p to 240.5p ahead of the important Vienna medical conference where it is expected to announce positive developments for its cancer drug. Cazenove was said to be buying.

Cable and Wireless scored again from last week's cable deal, advancing a further 10.5p to 486.5p. Abbey National added 16 to 636p as Merrill Lynch made positive comments. Pearson eliminated an early fall to end with a 5.5p gain to 738p.

Watson & Philip, the convenience stores chain, tumbled 45.5p to 420.5p as profit downgrades followed a cautious trading statement.

DFS Furniture gained 16.5p to 554p as the Kirkham family placed 21 million shares, around 20 per cent, at 533p through NatWest Securities. The sale was signalled earlier this month.

Stakis firmed to 100p with Lehman Brothers making positive noises. The casino and hotel group is expected within the next few weeks to unroll a pounds 300m-plus bid for Lonrho's Metropole hotels, an acquisition which would prompt a rights issue.

United Energy, with presentations scheduled, fell 0.5p to 15.5p but Westmount put on another 1p to a 45.5p peak as it was confirmed as a serious player in any oil and gas activities around the Falkland Islands. Desire Petroleum, in which it has a 20 per cent interest, has captured a number of concessions, giving Westmount an interest in 30 blocks.

Porvair, the synthetic materials group, rose a further 31p to 267.5p on the Butterfield Securities comments and Kenwood Appliances, the domestic equipment group, added 8.5p to 250.5p on the hostile interest of Messrs Myerson and Treger's aggressive fund management group. A call for a special shareholders meeting is due to be made later this week.

Gazprom, the Russian utility, arrived in ADR form, trading at around $17.5 against a $15.75 offer price. SR Gent, the clothing maker, drifted 7p lower to 67p. Conflicting stories did the rounds. One suggested an 80p Indonesian bid; another pointed at an offer in the 40p-50p range from Coates Viyella.

TAKING STOCK

o Corporate Executive Search International, a headhunter specialising in hi-tech appointments, is due on AIM next week. It is raising pounds 560,000 through a 3p-a-share placing. The cash will be used to develop operations in this country and Germany. The company is headed by Alan Bates, until recently chief executive of Bell CableMedia, part of the proposed Cable and Wireless cable alliance. Started by Mark Shields and Jane Reedy seven years ago, CESI made profits of pounds 436,000 in its last year.

o Peter Black gained 5p to 280.5p. The Marks & Spencer supplier's acquisition of Italian shoemaker Lenci Calzature is expected to dramatically improve M&S women's footwear. The M&S move into vitamins should also help Black's heathcare operations.