Market report: Friday close

BID fever gripped the City today, adding excitement to what would otherwise have been a quiet session.

Gallaher was chased up 16p at 853p on hopes of an imminent bid for the maker of Silk Cut and Benson & Hedges cigarettes. Gossip claimed Japan Tobacco, the world's largest cigarette maker, was poised to put in an offer at 1005p. A spokesman for the Japanese company, which makes Winston and Mild Seven, refused to comment.

Investors were also on board P&O, up 1¾p at 312¼p, on word that Danish container shipping giant AP Moller is sniffing round the ports and ferries operator. Conventional wisdom would suggest Moller is interested in P&O's 25% stake in P&O Nedlloyd, but the Danes could be pondering a bid for the ferry business.

Moller has already proved willing to put money into cross-Channel ferries. It recently ordered three vessels for its Norfolk Line, reflecting the biggest single investment any operator has made in the Dover shorthop market for a decade.

Leading shares continued to make progress from yesterday's headline-making close of 5000. With strong support for the miners, the FTSE 100 ended 44.2 points up at 5044.2, helped by an upbeat morning on Wall St. In New York at lunchtime the Dow Jones was up 67 points, at 10,815.

BHP Billiton rose 14½p to 680½p while Rio Tinto rose 42p to 1688p on hopes either may emerge as a counterbidder for Australia's WMC Resources.

Xstrata, up 14½p at 1051½p, has been given the all-clear to proceed with its bid by regulators.

Steelmaker Corus, 2¾p better at 60½p, topped the Footsie leaders on news that CSFB had placed 55m shares at 58p and made bullish remarks on the sector.

ICI, unchanged at 275p, came down to earth after UBS put out a surprise downgrade. Despite a 16% lift in profits, its analysts banished the stock from their buy list and moved it to a neutral recommendation. The group also revealed how switching to International Financial Reporting Standards will flatter its results. The £397m profits reported yesterday will rise to £422m under IFRS.

Shire Pharmaceuticals, up 2½p at 580p, was subjected to a twoway pull with investment house CSFB cutting its target to 640p from 700p but Morgan Stanley reiterating its overweight rating.

It says yesterday's 10% correction on the back of the Canadian withdrawal of juvenile hyperactivity drug Adderall XR was a 'significant over-reaction'. If the Americans do not pull the drug off shelves, Shire looks cheap but it is a risky call for investors.

Marks & Spencer was boosted by an upgrade from Lehman Brothers, which replaced its underweight rating for the struggling High Street giant with an overweight one. M&S was 7½p ahead at 369¾p, making it the second-best riser.

Its property portfolio is a 'unique strategic' asset with the potential to enhance earnings per share by up to 30%, reckon Lehman analysts, who have upped their target to 400p from 350p.

Merger mania saw Moss Bros 4p higher at 125½p as retail entrepreneur Kevin Stanford upped his overall holding to 29.2%. The cofounder of the Karen Millen clothing chain has bought one million Moss Bros shares, increasing his stake to 6.7%. On top of that, he has 22.6% through contracts for difference he bought from Shami Ahmed, the Joe Bloggs jeans founder who had previously been a bidder.