Market report: Yesterday's trading

UPWARDLY mobile blue chip

City phone lines were red hot with gossip that a near-£11bn bid from KPN, the Dutch telecoms network, had been agreed.

MmO2 was recently forced to reveal it had rebuffed an approach from the former Dutch state phone company following protracted discussions. That effectively hoisted a For Sale sign over the group and analysts were quick to say that its days of independence were numbered.

Rumours were rife yesterday that KPN had returned to the table and the mmO2 board had accepted an offer of 125p per share cash, with a share alternative. KPN later denied it had returned for talks and the price went off the boil.

There was vague talk before the close that Hutchison Whampoa, run by Hong Kong billionaire Li Ka Shing, is about to throw its hat in the ring officially.

MmO2 has 20m customers, including 13m in Britain. Those

1.7m private investors who got shares when mmO2, the former Cellnet, was demerged from BT ( 3/4p easier at 179 1/4p) in 2001, will be keeping all digits crossed that a bidding war does erupt.

'Fags' lit up the Footsie for a while as tracker funds continued to dig in following its historic promotion to London's premier index. Chilean copper miner Antofagasta rocketed 65p before succumbing to profit-taking. It finished only 2p dearer at 1172p.

The Footsie firmed 6.7 points to 4553.8. Dealers were encouraged by Wall Street's resilience on Friday despite shockingly weak US employment figures. Wall Street initially advanced 38 points.

Mail order giant Gussies rose 22 1/2p to 753p after Merrill Lynch upgraded to buy from neutral and set a target price of 820p. The broker says GUS has underperformed the retail sector by 10% since mid-January and is undervalued against its peer group.

British Airways climbed 4 1/4p to 332 1/4p after Dresdner Kleinwort Wasserstein lifted its target price from 340p to 380p ahead of chief executive Rod Eddington's presentation to analysts and institutions on Thursday.

Fundraising rumours dragged advertising giant WPP down a further 9 1/2p to 578p.

Professional punters raced to cover their short bear positions in Jarvis following comment on Saturday in the Mail. The troubled Private Finance Initiative contractor rallied 18p to 181 1/2p.

Now valued at £2.2bn and hoping to dance its way back into the Footsie charts, music company EMI rose 14 3/4p to 278 1/4p.

Management and consultancy services group WSP improved 4 1/2p to 200 1/2p after a better than expected jump in full-year pretax profits to £5.6m from £374,000. The long-term order book stands at a record £410m, up 35% on last year. Dividends held at 5p.

Investment company I2S soared 29 1/2p to 88p following news of an agreed £5.1m shares and cash offer made by KBC Peel Hunt on behalf of hedge fund manager RAB Capital.

Placed on Aim at 20p, Felix Group closed at the day's best of 30 3/4p for a tasty premium of 10 3/4p. It was reversed into Michael Edelson's former cash shell Chestnut Prospects and has developed a new form of sales promotion - a consumer interactive game called Everyone's a Winner.

Cash shell Reflexion Cosmetics, chaired by serial entrepreneur Nigel Robertson, made an impressive debut on Aim. Placed at 13p by broker WH Ireland, the shares closed at 24 1/2p.

AIM-listed Mears Group, which supplies maintenance services to local government, jumped 10 1/2p to 149p in active trading. Annual results on 30 March will not disappoint. Broker Arbuthnot forecasts pretax profits of £5.08m, up from £3.76m, and says Mears continues to benefit from the government's commitment to bringing all council homes up to a decent standard by 2010.