Market report: Monday close

SHARES in the UK's top drugs companies shot up today amid speculation that another wave of consolidation may be about to sweep through the sector.

That was fuelled by an agreement by Switzerland's Novartis to buy German generic drug maker Hexal and 67.7% of US generics company Eon Labs for a total of e5.65bn (£3.9bn) in cash.

GlaxoSmithKline rose 54p to 1295p, AstraZeneca advanced 87p to 2162p and Shire Pharmaceuticals climbed 19p to 581p, with investors also warming to news that major US drug Vioxx has been deemed safe enough to return to the market there.

However, with Wall Street closed for a public holiday, it was an indecisive day for blue-chips. There was a surge to a high of 5077.8, then the Footsie found itself dipping its toes into negative territory, before nudging to the upside again - closing up 3.6 points at 5,060.8. Despite the faltering tone, the FTSE 100 is testing levels not seen since September 2002.

Limiting gains was weakness across utilities, as investors switched out of the sector following a rise in US bond yields last week. United Utilities dropped 24½p to 625½p while Centrica was down 8p at 242p.

National Grid Transco, down 23¼p at 514¼p, suffered additional pressure after being cut by Dresdner Kleinwort Wasserstein from reduce from hold. The broker expects slower earnings growth than from NGT's peers and flags up regulatory risk as a concern.

Oil stocks, by contrast, were seen as a safe bet in anticipation of further commodity price strength, traders said. BP added 3½p to 558½p while Shell was up 7¾p 495¼p.

BG hit an all-time high at 405p, before easing slightly but, up ½p at 398½p, clinging on to positive territory.

Shares in oil minnow Ramco, meanwhile, soared 18½p to 56½p after the firm confirmed it has received a takeover approach.

Investec repeated its sell recommendation on Anglo American ahead of Wednesday's 2004 results, citing the 'wrong product mix' and strength in the South African rand. Anglo shares slipped 7p to 1341p.

With a fair-value estimate of 143p, the same broker reiterated its buy stance on second-liner MFI. Investec anticipates a recovery at the troubled furniture manufacturer in the wake of the supplychain problems that plagued the company's UK retail business last year, but the shares edged 2¼p lower to 140¾p.

Reversing earlier losses, midcap Premier Foods was up 2¾p at 282¾p, despite suggestions it is facing a probe by the Financial Services Authority (FSA) for a delay in telling the City watchdog that some of its products were contaminated with a potentially carcinogenic substance.

Rank advanced 2½p to 292p on reports it will this week unveil plans to demerge its film services division and sell its media business to focus on gaming and the bars and hotels business.

IT business Torex Retail, announcing maiden results, said underlying pro forma pretax profit was up 65% on the year to £11.3m. The firm is looking forward to the rest of this year with a 'very high level of confidence'. The shares rose 5½p to 95½p.

The first day of dealing on Aim for Adamind, a software firm that helps picture messaging, saw its shares rise to 155p after raising £15m from a placing priced at 132p, having earlier hit a peak of 161½p.