Market report: Thursday close

ONE of the City's few remaining independent merchant banks,

Just a few weeks ago, 19% shareholder Icelandic merchant bank Kaupthing announced it was in bid talks with S&F. Since then, not a word has been heard. But whispers around the Square Mile suggest Kaupthing is now ready to offer up to 350p a share, valuing S&F at £605m. Kaupthing wants to do deals, so what better excuse to buy a merchant bank? S&F edged another 8¾p higher to 315¾p.

Share prices briefly tested the 4800 support level after the spectre of rising inflation came back to haunt investors. But City investors fought a fierce rearguard action, driving the FTSE 100 index up 12 points to 4834.0. At the close the FTSE 100 was 2.4 points lower at 4819.6. It was underpinned this afternoon by a strong rally by the Dow on Wall Street in the wake of yesterday's news of the biggest jump in inflation for two-and-a-half years.

Beefeater Gin and Ballantine's whisky group Allied Domecq led blue-chips higher with a rise of 22p to 665p. French rival Pernod Ricard has bid 670p a share and the terms are being backed by the Allied board.

Shares in Pernod, which is being backed by America's Fortune Brands, climbed 4% on the Paris bourse today as brokers began to calculate potential cost savings if the deal goes through. UBS remains a buyer of Allied.

Punch Taverns fell 7½p to 669½p after broker Teather & Greenwood downgraded the shares from buy to hold ahead of next week's interim results.

Telecoms equipment supplier Spirent tumbled 11¾p to 44½p on turnover of more than 18m shares after the company warned operating profit would be significantly below its previous expectations. The group blamed a weaker performance from its service assurance division.

But the market was pleased with interim results from troubled retailer WH Smith, up 21½p at 365¼p.

Profits came in at the top end of expectations and trading in the second half is not too bad, with same-store sales flat in the first seven weeks to 16 April. Retail analyst Nick Bubb at broker Evolution Securities breathed a sigh of relief at the absence of a profits warning. He had expected current sales to be down about 4% and has now raised his pre-tax profit forecast for the year by £3m to £70m.

Financial services outfit HHG rose ¼p to 59½p after a line of 5.6m shares went through on the ticker at 59¼p.

BTG stood out with a jump of 34¾p to 144¼p. It will be submitting a revised outline of clinical protocols within the next few weeks for its varicose veins treatment Varisolve.

The move follows the nod from the US Food and Drug Administration which already has the treatment on clinical hold. Broker Baird has already raised its recommendation on the shares from neutral to outperform.

Trading Emissions is a company that makes money by purchasing emissions assets at the right price. Today it started trading on the Alternative Investment Market after a placing of 135m shares at 100p by broker Numis Securities.

Brokers say the company is sure to have had the backing of the big ethical funds, but there was not much of a follow-through in the shares, which rose to 103p.