Brokers in spotlight on takeover buzz

OUTSPOKEN chief executive Terry Smith's stake in

At Wednesday's closing price of 464p, up 9p, it is now valued at about £41m. If rumours persisting in the market are anything to go by, it could soon be worth a lot more.

Word is the stockbroker and inter-dealer money broker received a tentative bid approach from a US bank, but Smith sent it away with a flea in its ear. Punters now hope it will return with a hostile offer.

Collins Stewart has gone from strength to strength since forking out £250m for money broker Tullett in March. The City applauded Smith's move because the purchase helps it diversify from equities into fixed income and derivative products, which offer a cushion in troubled times. Indeed, analysts expect £40m of CST's £70m pre-tax profits this year will come from Tullett.

On the corporate finance front, Collins Stewart earned significant fees from fronting sizable deals. These include helping to spin off utility Northumbrian Water from French company Suez and masterminding the £27m flotation of Sondex in June.

Charles Schwab, the US discount broker, reported a 29% jump in second-quarter profits and a 27% dividend rise. Although it remains cautious about the sustainability of the improvement, dealers say markets on both sides of the Atlantic are well over the worst.

Those surviving and now thriving UK stockbrokers could attract corporate interest from across the pond. One of the worst-kept secrets during the dotcom-boom was that Schwab was interested in buying market-maker Winterflood Securities from Close Bros (16 1/2p better at 697 1/2p). It was prepared to pay £1bn-plus for WINS, but Close's then chief executive Rod Kent rejected the offer. We all know what happened soon after - the bubble burst.

Evolution Group, which expanded its market-making coverage by a further six retail stocks, firmed 1p to 63 1/2p. More than 5m shares in Aim-listed Seymour Pierce changed hands, but the close was unchanged at 33/8p. Shareholders still await the promised special dividend.

Bolstered by impressive second-quarter earnings figures from GlaxoSmithKline (37p up at 1212p) and a gain of 29p to 2450p at rival AstraZeneca ahead of its trading statement, the FTSE 100 advanced 35.5 points. But when Wall Street slipped in early trading, London drifted to close only 6.8 points better at 4086.5. Sterling edged up to $1.6069, while the euro improved to 71.35p and $1.14803.

Mitchells & Butlers rose 9p to 239p after submitting its bid in the auction for the pubs estate of Scottish & Newcastle (4 1/4p off at 364p).

Currys-to-PC World electrical retailer Dixons eased 1p to 132 3/4p after the Competition Commission changed its proposals for regulating the sale of extended warranties. The suggestion is that retailers may be prevented from offering a full warranty on the day an appliance is sold, giving customers time to reflect. Profits could suffer.

Wealth manager St James's Place fell 16 1/2p to 113 1/2p after Merrill Lynch turned seller ahead of next Tuesday's interims. It forecasts a first-half pre-tax loss of £8m compared with a £13.8m profit last time.

Lastminute.com jumped a further 10 1/2p to a year's peak of 214 1/2p. Turnover swelled to almost 10m as rumours of an imminent bid from Expedia intensified. Rival ebookers advanced 20p to 522 1/2p in sympathy. Aim-listed Online Travel, which last summer had failed bid talks with a potential suitor, improved 1p to 25 1/4p.

Track-based gaming group Wembley sprinted 48p higher to 701p following reports that HBOS wants to team up with 22.8% holder Active Value to launch a bid.

Engineer FKI lost 5 1/2p to 97p following an annual general meeting warning that sales would be weaker in the second half.