Market report: Monday close

VIKING raiders spiced up retail today as Icelandic group Baugur let it be known that it remains on the

The Norsemen may still launch a £1bn-plus bid for Somerfield, unchanged at 187p, despite the supermarkets group's refusal to open up its books.

Meanwhile, investors were trying to get into the notoriously illiquid French Connection, up 8p at 315p, after it emerged that Baugur may be trying to buy a 3% stake in the fashion chain.

The Icelandic company said today it is 'reviewing its options with respect to Somerfield, one of which includes a possible offerî. But it made it clear that if it decides to go ahead, it will seek a recommendation from the board, which last week rejected its indicative 190p-a-share offer.

After a terrible autumn/winter season, French Connection is due to report final results next week but brokers reckon that in the absence of a trading recovery the Baugur bid speculation provides a second potential upside to the stock. Analysts at Numis recently calculated a takeout price of about 400p.

Strong results from a number of companies gave the FTSE 100 an initial boost. But HSBC, the second-biggest company by market capitalisation, failed to impress the City despite a record £10.1bn profit, and helped drag the index 38.3 points lower to 4,968.5.

Investors punished HSBC for turning in profits at the lower end of expectations, marking the shares down 29p at 864p and making it the biggest blue-chip loser. Wall Street confounded forecasters by opening sharply down, with the Dow Jones slipping 25.90 to 10,815.7 in early trade.

Strong demand for miners, led by BHP Billiton, 8½p higher at 776½p and Anglo American, up 1p at 1297p, provided some support while the market went crazy for services group Bunzl, 30¼p ahead at 500¼p. Bunzl topped the Footsie climbers after unveiling a forecast-busting 14% surge in profits alongside plans to demerge Filtrona.

BG was up 7¾p at 408¼p on rumours that Centrica, 2½p higher at 236½p, is considering a bid. But Dresdner Kleinwort Wasserstein analysts are sceptical and say the deal may not be possible on competition grounds. Also, BG, as the bigger player, would expect to be the dominant partner but has shown no interest in a merger.

Staffing agency Reed Health plunged 15p, or 25% to 50p after a fourth profits warning in 20 months. It blamed 'continuing difficult trading conditions in a number of the group's operations'.

Drugs discovery group Phytopharm saw a fifth wiped off its market value after a key client, Japan's Yamanouchi Pharmaceutical, delivered a bodyblow. It is dropping a potentially lucrative licensing agreement for new Alzheimer's treatment Cogane, one of the company's two leading pipeline products. As a result, Phytopharm, down 39p at 150p, is scrapping the planned £24m fund-raising that would have accelerated the development of the Alzheimer's treatment and of motor neurone drug Myogane. Broker Numis cut its recommendation to hold from buy.

Internet poker sites have taken the public and the stock market by storm. This month's rapid rise of Gaming Corporation - the stock has quadrupled in four weeks, but was 3.12p lower to 15.88p at the close, after announcing that it has appointed an adviser and broker, industry specialist Canaccord Capita.