Market report: Wednesday close

THE stock market rumour mill was working overtime today as share prices touched another two-and-a-half-year high.

This time, City speculators switched their attention to online bank Egg, which rose 8¾p to 116p as almost 9m shares changed hands amid claims parent Prudential, up 4½p at 471½p, had done a U-turn and found a buyer for its 80% stake. Word is the French insurer Axa has shown an interest.

The Pru put its £950m investment in Egg up for sale last year, with Royal Bank of Scotland and US credit card operators Capital One and MBNA said to have expressed interest. But after seven months the Pru had failed to find a buyer for the business for which its chief executive, Jonathan Bloomer, took a fair amount of stick. He insisted retaining the stake offered investors better value.

Blue-chips edged ahead again in thin trading. The FTSE 100 closed 10 points higher at 4916.2. Wall Street made a nervous start this afternoon ahead of an expected rise in US interest rates tonight. The FTSE 250 index hit another record high with a gain of 32.5 to 7257.9.

British Vita soared 41p to 320p after rejecting a takeover approach. At these levels, the company is worth £614m.

Timing is everything in the stock market. Just ask Phillip Carter, founder and chief executive of Carter & Carter, who has bagged £28m by taking his company public.

Carter & Carter, which trains mechanics for Britain's carmakers, has become the first company to achieve a full listing on the stock market this year. A total of 22.9m shares were offered at 235p, valuing the business at £78.4m. The shares started life at 253½p before accelerating to 295½p.

Takeover favourite Exel came off the boil, falling 41p to 832p. The price touched 900p yesterday on talk of a bid from UPS, the American parcel carrier, worth up to 1000p a share.

No-frills airline easyJet dipped 1½p to 223p ahead of monthly traffic numbers on Monday. Broker UBS has repeated its neutral rating and raised its target from 190p to 230p. Other brokers are more upbeat on prospects for discount airlines following results from rival Ryanair, 21 cents better at €6.49, earlier this week.

The group warned that rising fuel costs will force it to push up fares. Goldman Sachs yesterday raised its forecast for 2005 net income to €245m (£169m) from €207m to reflect better passenger yields. UBS remains neutral but has lifted its target from €5.50 to €7.50.

Air Partner rose 30p to 515p after revealing profits in the first six months would come in ahead of City expectations.

Yesterday, Virgin Mobile, 6p cheaper at 240p, was boasting it had more than 5m customers. Today, brokers began downgrading their forecasts for the shares after signs of a slowdown in 'top-line' growth and an increasing element of customers switching between mobile phone companies.

JP Morgan cut its recommendation from overweight to neutral, saying the shares had enjoyed a strong performance of late. Goldman Sachs repeated its inline rating, but insisted the shares should reflect higher business risk.

Biofusion, dedicated to commercialising universitygenerated intellectual property, made its debut on AIM. Placed at 150p, the shares later slipped to 149½p.