Dealers switch radio off

DEALERS turned a deaf ear to revived gossip of an imminent merger between

You couldn't blame them because they've heard it many times before and the companies are giving them no clue.

Indeed there have been rumours, ever since government legislation removed many of the media ownership barriers at the start of the year. But they could be kicking themselves. One City source was adamant that the finance is now all in place.

Capital is one of the leading commercial broadcasters. In addition to Capital FM, it runs Capital Gold, Xfm, Century and Choice and a host of other stations around the country. GWR, 29.9% owned by DMGT, publisher of the Daily Mail and This Is Money, operates 30 local stations plus Classic FM, the jewel in its crown.

Analysts are in total agreement that an enlarged group would become an unrivalled springboard for advertisers and create a digital radio giant.

Cost savings could be more than £8m. It would dominate the industry in a single move, relegating Heart FM's Chrysalis (1 1/4p better at 182 1/2p) to second-class citizen status.

With a raft of blue chips going ex-dividend - trading without entitlement to the latest dividend payments - and talk that Wall Street would open sharply lower following Cisco System's ultra cautious statement overnight, the Footsie had only one way to go, and that was down!

It stood 35.1 points easier before Wall Street, as expected, opened with a 103-point fall. It was soon 61.3 down before rallying to finish 38.7 points off at 4,312.2.

Drinks giant Allied Domecq gave shareholders a tonic, rising 7 1/4p to 437 1/4p on a Cazenove upgrade to outperform.

The broker believes next month's trading update will reveal further market share gains by its major spirits and wine brands.

Break-up bid speculation lifted royal rat-catcher Rentokil Initial 3 3/4p to 151 1/2p. Broker ING upgraded to hold from sell ahead of interim results from the new management team on August 26.

Chairman Brian McGowan is expected to announce major disposal proposals and plans to return cash to shareholders.

LloydsTSB fell a further 10 1/4p to 403p on fears it will get involved in an expensive bidding war for control of Abbey National, 6p easier at 581p.

Abbey has agreed to an £8bn-plus takeover by Banco Santander Central Hispano but as far as City speculators are concerned, that means nothing.

Other major banks including Lloyds TSB, HBOS (16p lower at 663p) and Royal Bank of Scotland (31p down at 1471p) are hovering.

Support services group Interserve rose 13 1/4p to 280p after its joint venture with Southern Electric Contracting, PriDE, was named preferred bidder by the Ministry of Defence for the £400m contract covering London and the South East of England.

Online betting group Sportingbet improved 2 3/4p to 93 1/2p after executive vice chairman Mark Blandford bought 50,000 shares at 92p and now holds 14.98m.

Seymour Pierce stoked up demand for UK Coal, 11p better at 154p. Following a company visit, analyst Charles Kernot puts a valuation of 286p on the stock.

The group owns 49,000 acres of land across the UK. The redeveloped value of this land is substantial. Meanwhile, higher coal prices should provide the company with scope to increase dividends.

Gold mining minnow Minmet edged up 1/4p to 3p. It has started mining at its Bjorkdal gold mine in the Skelleftea district of Northern Sweden.

Aim-quoted Lendu advanced 10p to 74 1/2p after a subsidiary sold its three irrigated cotton properties in Australia together with plant, machinery and vehicles, for £17m.

Newmarket Investments jumped 2 1/2p to 24 1/2p after director Ross Reason bought 29,275 shares at 22p. Together with director Simon Hayes, they own 2m shares, or 20.4%.