Market report: Monday close

Word is that BA has its sights on state-owned Aer Lingus, which earlier this month saw its own management approach the Irish government for permission to seek financial backing for a buyout.

BA boss Rod Eddington told the Irish Press at the weekend: 'We'd certainly be an interested party. Whether it would make sense for both parties to have an equity investment at some point, only time will tell.'

If the Irish government gave the go-ahead to a management buyout, it would effectively put a 'for sale' sign on the business.

Eddington has now asked his bankers to work out how much the deal would cost.

A BA spokesman said: 'Clearly the destiny of Aer Lingus is something we are interested in, as a oneworld airline and a carrier in a neighbouring market we will review any opportunity that may arise once the Irish government decides how it wants to proceed. BA has long called for greater consolidation in Europe.

'Iberia is our partner of choice in Europe and we continue to discuss deepening our relationship.'

Share prices traded lower for choice following a dull performance by the Dow in New York on Friday, while Tokyo was closed today for Marine Day holiday. In London, the FTSE 100 index fell 18.1 to 4321.1.

Smith & Nephew shed a further 13 1/2p to 554 1/2p in the wake of Friday's big fall in shares of rival Stryker in the US, which has been hit by a cutback in spending by hospitals. Broker Dresdner Kleinwort Wasserstein says the problems are specific to Stryker. But other brokers are concerned S&N's growth will be affected by the problems in the US.

Supermarkets chain Wm Morrison, still busily digesting rival Safeway, hardened 1 1/2p to 181 3/4p. It emerged on Friday that US investor Brandes had picked up a 3.3% stake. Brandes sprang to prominence recently as the biggest independent shareholder in Marks & Spencer with almost 12%.

Morrison rocked the City earlier this month with a profits warning after complaining it had been unable to stem the loss of customers at Safeway despite hundreds of big price cuts.

Broker UBS has started coverage of market newcomer Halfords, down 1p at 276 1/2p, with a neutral rating and a 290p target.

Life assurer Prudential shaded 4 1/2p to 433 1/2p. It is said to have imposed a deadline for potential buyers of its near-80% stake in internet bank Egg. Only last week, Egg said it was closing down its French operation with losses of hundreds of millions of pounds, paving the way for the sale of the business which the Pru put up for sale in January. Meanwhile, US broker Lehman Brothers has reduced its target for the Pru from 565p to 555p. Egg rose 4 1/4p to 155 3/4p.

Intercontinental Hotels rose 4p to 576p as Deutsche Bank repeated its buy rating on the shares.

Securicor was suspended at 131 1/4p after receiving 90% acceptances in favour of the merger of its security business with that of Group 4 Falck's. A total of 44m shares were traded ahead of the suspension of business, including a line of 4.75m at 131 1/4p.

Wigmore Property Investment Trust was suspended at 184 1/2p pending an announcement. At last week's EGM, shareholders voted unanimously to wind-up the company.