Princess has a ball on Carnival hopes

IT WAS full steam ahead for cruise giant

Carnival, the largest cruise line, has until Friday to put up or shut up. It made an indicative £3.2bn (452p a share) conditional offer three weeks after Princess agreed a 'friendly' £4.8bn merger with Royal Caribbean Cruises.

Several of Princess's large institutional shareholders have already said they will back the merger plan. But their attitude is bound to change if, as strongly rumoured last night, Carnival increases its cash offer by more than 50p to £5-plus, and drops some of its conditions.

Carnival has already urged Princess investors to adjourn an extraordinary meeting on 14 February to vote on the Royal Caribbean merger, in order to allow regulators time to examine competing deals. A combined Princess Cruises and Royal Caribbean would have a clear lead over Carnival in the world cruise market. It would have 41 ships with 74,800 berths, giving it 33% market share, ahead of 29% for Carnival.

The waters elsewhere were choppy as revived worries about US corporate profits prompted an early fall on Wall Street. Gloom set in and the Dow Jones Industrial Average finished 211.88 down at 9712.27. The FTSE 100 closed 38.4 easier at 5127.6.

Intel, the world's biggest chip maker, got the fourth-quarter results season off to a disappointing start. Although reporting stronger-than-expected earnings on a 20% plunge in sales, it plans to cut capital expenditure significantly this year. It warns it is too early to tell if an economic recovery has started.

Heavy losses at investment bank JP Morgan increased the tension on Wall Street ahead of statements from Apple Computer, Compaq and Yahoo! last night. IBM reports today.

In London, ARM was 18p off at 325 1/2p and Arc International 3p off at 44p. Reflecting the profits warning by US rival Tyco, Invensys was sold down to 113p before closing 7 1/4p lower at 114p on turnover of almost 50m shares.

Capita shed 21p to 436p on nervous selling sparked by a report that the Government has abruptly shut down its £260m flagship training programme after finding a security problem in a Capita-run computer system.

Still worried about ITV Digital subscriber numbers, Granada remained friendless at 135 1/4p, down 4 3/4p. It has increased its stake in Premiership soccer club Arsenal to 9.9% from 4.9%, paying £30m for the privilege.

On the plus side, gas distributor Lattice rose 5p to 167p on a Merrill Lynch recommendation. Builder Alfred McAlpine advanced 20p to 419p after an upbeat trading statement. Second-half trading was in line with expectations. Its forward order book tops £1.3bn.

Troubled golf club operator Clubhaus was lifted 1 3/4p to 6 1/2p as Paul Davidson increased his stake from 3.9% to 8.8%. Millionaire Davidson wants to replace the directors with publisher Eddy Shah, former Davis Cup tennis star David Lloyd and Crown Sports boss Martin Knight.

Convinced the £68m disposal of Biocompatible's eye care division will pave the way for a 'friendly' takeover by Abbott Laboratories of the US, punters chased Bios 17 1/2p higher to 155p on turnover of 9.3m.

Software and services company SDL held at 66 1/2p despite its acquisition of ALPNET, one of its main competitors in the US. The deal doubles its size. Coinmaster Gaming, which sells gaming machines to over 30 countries, made a quietly firm start on Ofex. Placed at 55p, the shares improved 2 1/2p to 57 1/2p, making the company worth £7.4m.

IT consultant Xansa fell 46 1/2p to 302 1/2p on fears about the outlook, though interim profits rose 54% to £23.1m. Guardian IT fell 15p more to 117 1/2p. Standard Life sold 350,000 on Tuesday and now holds less than 3%.