Market report: Monday close

ITV merger twins

Granada led the top 100 companies higher with a rise of 5p to 102 3/4p, while Carlton was the best performer among second-liners, up 15 3/4p to 182p. Hewitt is expected to approve the deal so they can compete head-to-head with satellite broadcaster BSkyB, off 1 1/2p at 638 1/2p and valued at £12.4bn.

Traders say the Government may impose limits on how much they can charge advertisers, or may even force them to sell their ad sales divisions, which could scupper the merger altogether.

Broker HSBC has taken the opportunity to repeat its reduce recommendation on both, while Investec Securities says that, if the deal is blocked, Carlton may fall to 120p and Granada to 78p. US broker Bear Stearns has upgraded Granada to outperform with a 115p target price.

Carlton and Granada own 12 of the 15 ITV broadcast franchises, but they have been poor performers in recent years, reflecting the advertising downturn. Carlton's share price has slumped from 900p three years ago, while Granada is down from a peak of 270p.

Share prices generally were subdued by Israel's air strike on Syria. Prices traded in a narrow band and the FTSE 100 index fell 8.1 points to 4265.9.

Vodafone dipped 1/2p to 122 3/4p, despite US securities house Lehman Brothers raising its earnings estimate and target price from 150p to 160p.

Scottish & Southern Energy firmed 2 1/2p to 614p after taking control of the Isle of Grain power station for £ 242m. The acquisition adds another modern, efficient station to SSE's fleet which, including hydroelectric power stations in Scotland, accounts for some 10% of the UK's generating capacity.

Traders are not expecting too much from tomorrow's second-quarter trading update at Marks & Spencer, up 2 1/4p at 314 3/4p, with US investment bank JP Morgan repeating its neutral recommendation. Analysts are not looking for a repeat of last year's big improvement and are forecasting singledigit earnings growth.

Speculation has resurfaced that Prudential, 1/2p cheaper at 438 1/2p, may be contemplating the sale of its internet banking arm, Egg. Speculators say the bidder could be financial services outfit Cahoot.

Last week, there was talk that Egg may pull out of its loss-making operation in France. This led to speculation the Pru has put the business up for sale with a price tag of £2bn, or, at the very least, may be ready to reduce its 75% stake. Egg fell 1/4p to 135 3/4p.

Manchester United climbed 18 1/4p to 236 1/4p as bid speculation intensified. In late trading on Friday, hedge fund Lansdowne sold more than two million shares, almost 1%. The sale reduces its stake to 5.17%. The buyer is thought to have been Malcolm Glazer, owner of the NFL's Tampa Bay Buccaneers, who last week almost doubled his stake to 15.4m shares (5.92%). Today a line of 548,429 went through at 223p and 466,777 at 223 1/2p.

The trades follow the move by US Irish trio JP McManus, John Magnier and Dermot Desmond, who between them own almost 13% of the shares with BSkyB holding 10%.