Punters scramble for Egg

IT'S been simmering for months and now dealers believe that

The Pru put Egg up for sale in January, but bidders - including Lloyds TSB, Royal Bank of Scotland and Capital One - pulled out because of price.

Bankers now say that MBNA's offer may represent the last chance for Prudential to find a buyer for Egg, which has 3.2m customers. Buying it would be the latest stage in MBNA's ambitious plans to expand in Europe. It forked out £289m to buy Abbey National's credit card business three years ago and in 2002 it bought Alliance & Leicester's card operations.

Elsewhere, dealers heaved a sigh of relief as a tame reading of US inflation data for May suggested the Fed will stick to its approach of raising interest rates in the US at a 'measured pace'.

A 0.25% increase to 1.25% on June 30 had already been well discounted but markets were worried that a strong inflation reading could upset the apple cart and prompt a 0.5% jump.

The Footsie closed 25.4 points higher at 4458.6, helped by an opening 90 point advance on Wall Street. Sterling improved to $1.8297, while the euro dipped to 66.4p and $1.2150.

Housebuilders came under the cosh after Mervyn King, the Governor of the Bank of England, warned of a growing risk that the housing market may fall. He said: 'After the hectic pace of price rises over the past year, it is clear that the chances of falls in house prices are greater than they were.'

Barratt Developments shed 11 1/2p to 569 1/2p, Bellway 27p to 738p, Wilson Bowden 33p to 1024p and George Wimpey 10 1/4p to 368 1/2p. But Richard Hair, president of the National Association of Estate Agents, said: 'The Governor may be threatening a crash, but here at the front line we are merely expecting a natural levelling out.'

Continuing to reflect fears that a large deficit in its pension fund could undermine a bid from venture capitalist Permira, retailer WH Smith fell 12p to 325p. Alfred McAlpine cheapened 5p to 284 3/4p despite winning a £40m construction contract at Stoke Mandeville Hospital.

Sold down to 269p amid rumours of an imminent share placing to help finance the roll-out of its Real Time Nostro software, Gresham Computing rallied to finish 4 1/2p off at 280 1/2p.

Drugs company Goldshield rose 9p to 259p following better than expected full-year pre-tax profits before exceptionals of £3.3m and a 21% dividend rise to 3.5p.

Reflecting a strong swing into fullyear profit of £2.1m from a loss of £7.9m, thanks to sales in its cosmetics business, Aim-listed Victory Corporation soared 111p to 315p. Sales in the first eight weeks of the current year were up an encouraging 15%.

Galleon, the intellectual property group that owns the rights to children's characters, edged up 0.06p to 0.71p following its acquisition of a 50% stake in Hollywood's newest animation studio, J Christopher Entertainment, for 6m shares at 1p each.

Desire Petroleum gushed 2 3/4p to 19 1/2p on heavy buying amid speculation that it is in talks with Shell about farming out its licences in the Falkland Islands.

Investment company Guinness Peat edged up 1/2p to 67p despite news that chairman and New Zealand entrepreneur Sir Ron Brierley sold 250,000 shares at 65 1/2p. He retains 3.8%.

Buying ahead of City presentations helped flat speaker group NXT rise 7 1/2p to 112p.

Future Internet Technologies firmed 1 3/4p to 10p after Winterway Investments acquired a 14.6% stake. A disappointing trading statement pulled the plug on Telspec, 2p off at 12p.

Confirmation of the bid approach predicted here yesterday left logistics group Tibbett & Britten 94 1/2p higher at 584 1/2p. TDG accelerated 14p to 216 1/2p in sympathy.

DEBTS at Profile Media peaked at £29m but disposals and a debt for equity swap with Barclays reduced net liabilities by £8.3m. Broker Charles Stanley believes the shares - 0.02p dearer at 1.62p - are a buy. The outlook for its UK and US publishing operations has improved following the refinancing, with evidence of a pick-up in market conditions and more projects in the pipeline.