Alliance & Leicester lifted on £6bn bid talk

Mortgage bank Alliance & Leicester surged to a new peak of £12.21 at one stage yesterday as reports that it had rejected a near-£6bn European bid approach swept through the market.

The offer is said to have been pitched at £13 a share and to have come from the French financials giant, Credit Agricole.

A&L was making no comment yesterday but its shares were at one stage the biggest gainers in the FTSE 100. They came off the boil later to end 10p higher at £11.92.

Their rise was very much against the trend, both for financials and the wider market, with the FTSE 100 index tumbling from a fresh five-year peak of 6,047 points to end the day back below the 6,000 barrier: it was 64.1 lower at 5,972.2.

News that Temesek, the Singapore government investment arm, was buying the 11.55% stake up for grabs in Standard Chartered bank, down 7p to £15.24p, came after the market had closed.

Among the leaders oils were on offer as the crude price weakened, while banks and financial stocks - A&L apart - were pushed down as investment bank Lehman Brothers cut its weighting in the global sector from 22% to 17%.

Royal Bank of Scotland tumbled 24p to £18.43p, while the biggest FTSE 100 faller was asset manager Schroders, its non-voting shares falling 35p to £11.58.5p. Fund manager Amvescap was also weak, losing 12.5p to 559.25p.

But the market remains on high bid alert, despite disappointment over Aviva's abrupt withdrawal of its £17bn move on insurance rival the Prudential last Friday. Pru shares eased another 9p to 672p yesterday. Both management teams have come under fire for the way in which the short-lived approach was handled, with the spotlight yesterday turning to the Pru's Mark Tucker.

A number of leading shareholders are keen to know why he refused to enter into any sort of discussions with his larger rival, and he will be called on to give a more detailed explanation of his swift rejection.

There was some support for Aviva as investment bank UBS lifted its price target from 810p to 835p, although the shares dropped 6p to 826p. Kevin Ryan, analyst with ING, set his 12-month target at 861p and said he expected Prudential shareholders to put pressure on the board to do a deal with Aviva.

Elsewhere among the leaders pension worries weighed heavily on Cable & Wireless, down 3p to 109.25p on weekend reports that it is facing a £300m increase in its deficit. A gap of this size would effectively act as a "poison pill", deterring potential bidders from a move on the troubled telecoms operator.

Drinks giant Diageo became the latest company to act on its deficit, putting an initial £100m into its pension fund. It plans to plug the £650m-plus gap over seven years but said this would not affect a share buyback programme it had already announced. Its shares ended 3.5p lower at 904.5p.

British Airways, meanwhile, is facing resistance from staff over its decision last week to raise its retirement age to 65 in an effort to tackle its huge £2bn pensions black hole. The shares eased 1.25p to 355.5p as the trustees appointed accountants PricewaterhouseCoopers to advise them on assessing the company's financial covenant position.

Associated British Ports surged 21p to 717p as Goldman Sachs confirmed a £2.3bn consortium move on Britain's biggest ports group. This is the latest in a flurry of takeover activity in the ports sector, following the near £4bn move on P&O by DP World. Shares in Forth Ports, the country's only other quoted port company, jumped 28p to £18.69. Rival bidders are said to be circling for ABP and could include the Spanish Ferrovial group, should it fail in its attempted £8.8bn move on airports operator BAA.

The Spanish are said to be meeting more BAA investors this week in an effort to convince them of the attractions of their approach. BAA, meanwhile, is scheduled to update investors on trading today. Its shares slipped 3p to 831p, still ahead of Ferrovial's 810p terms.

Still among the leaders, news that Daily Mail and General Trust has sold Aberdeen Journals to Beano publisher DC Thomson was well-received. The £132m proceeds were higher than expected, according to analyst Charles Peacock of Seymour Pierce. He maintains his outperform recommendation on the shares, which fell 9p to 701p.

Miners got a boost as copper prices hit a record high of $5,315 a tonne in London, up over 1%, on worries over disruption to supply. A strike is threatened at the big Grupo Mexico mine, La Caridad, and there are also threats to production in Indonesia. Rio Tinto eased 25p to £28.29 despite a recommendation from Citigroup, which has upgraded the company to buy from hold and raised its earnings forecasts. Over the next four years the company is expected to pay out as much as $8bn (£4.6bn) in dividends, the broker said.

Oil firms were weak as crude prices slipped back, leaving BP down 9.5p at 659p and Royal Dutch Shell A shares 9p lower at £17.60. But among the tiddlers, explorer Afren stood out with a 9.5p surge to 68p on news of a big discovery in the Gulf of Guinea. The company, which has former Opec secretary general Rilwanu Lukman on the board, has a 9% stake in the consortium behind the find.

Sound of success

Chrysalis shares rose nearly 7% to 154p yesterday after the radio station owner reported it was riding out the advertising downturn. In a trading update ahead of its interim results in May, Chrysalis said it had "comfortably" outperformed the market. Although its advertising revenues were down 4% in the six months to February, this is better than the combined 8% fall in advertising across the radio sector. Chrysalis, which owns London's top-rating station, Heart 106.2, said ad revenues were up 10% in March and April. Meanwhile, the company's music division boosted its share of publishing revenue by 7% in the first half. Chief executive Richard Huntingford said he was confident the year would be "a successful one" for the company.