Dutch deal rumour puts heat on Pru

CORPORATE financiers are burning the midnight oil because mouthwatering bids and deals have suddenly become commonplace again.

Whispers that Prudential, which lost £455m last year after a £1.4bn investment write-down, has agreed to climb into bed with Aegon, the Dutch financial services giant that owns Scottish Equitable, got punters excited. They chased the Pru up to 750p before it closed 12p better at 731 1/2p on heavy turnover of 17.2m shares.

Aegon has recently been mentioned in the same breath as Britannic (unchanged at 695 1/2p) but dealers heard that a nil-premium marriage with the Pru could be on the cards. If so, it would be Aegon's chairman Kees Storm's swansong. He steps down in April before retiring in July. Prudential left itself wide open to a bid after failing with a £14.7bn all-share offer for US rival American General last year. AIG of the US gazumped its offer with a £16.2bn deal.

CGNU ended 23 1/2p dearer at 775p on a Lehman Brothers recommendation. Aberdeen Asset Managementremained friendless at 276p, down 12 1/2p on continuing concerns about split capital trusts. About £2.7bn of AAM's funds are in the controversial 'splits'. Revenues from them in 2001 were £18m, or 10% of the total. The Financial Services Authority is investigating 'splits' and the big worry is that it might demand compensation for investors.

St Davids Investment Trust lost a 1 1/2p gain to finish 1/2p off at a low of 3 1/2p. It is the latest fund to breach its banking covenants with RBOS and will be unable to make dividend payments to shareholders.

Wall Street lost an early lead with the Dow ending down, ahead of today's Federal Open Market Committee meeting at which the Fed is expected to leave US interest rates on hold but change its policy from an easing bias towards a neutral stance. The FTSE 100 finished 7.2 points better at 5,299.9. Sterling edged up to $1.425, while the euro eased to 61.9p.

ICI was the pick of the Footsie, rising 19 1/2p to 320p and the new nil-paid 20p to 140p on a Credit Lyonnais Securities recommendation. Analyst Zac Phillips has raised his target price to 350p. British Airways soared 11 1/4p to 253 1/4p after restoring many of the North Atlantic routes cancelled after 11 September.

But BAA nosedived 20p to 646p after launching a £424m 2.94% unsecured convertible bond issue. The proceeds will be used on Terminal 5 at Heathrow Airport and the rest of its capital expenditure programme.

Rumours that The Link, Dixons' chain of 279 stand-alone phone shops, has suffered a further sharp slump in sales since January prompted nervous selling of the Currys-to-PC World group, but the close was 1/2p dearer at 259 1/2p.

Analysts reckon the trading environment for The Link is likely to remain extremely difficult for 12 months. Like-for-like sales are expected to fall 25% in the year to April. Word is that the Dixons management is shelving plans to open 10 to 20 shops this year.

Building materials firm RMC jumped 40 1/2p to 653 1/2p after hinting that it may sell its troubled German operations.

AIM-listed Interactive Digital, the software company, edged up 1/2p to 3 1/2p after signing a strategic partnership deal with Wandsworth Electrical Ltd to license its RISC digital system to NHS Trust hospitals.

Management Consulting rose 7p to 70 1/4p on £606,000 annual profits and an upbeat statement about prospects.

Royal Doulton cracked after 21.6% shareholder Waterford Wedgwood's failed attempt to block a £20m rescue rights issue. It closed 3 1/2p down at 10 1/4p.