Vita lively on bid talk

CHEMICALS companies have been swallowed by hungry foreign predators in recent years.

Vita recently said it had seen signs of a modest improvement in conditions with volume recovering from the low levels of late 2001. The stock has already risen sharply from an end 2001 level of around 200p and would soar if a takeover approach was confirmed. Analysts estimate a take-out price of between 375p and 400p.

Buyers were as scarce as May Day protesters in the City as the FTSE 100 lost an early gain to finish 40.1 points off at 5125.5. Wall Street dropped sharply in early stages following weaker-than-expected US manufacturing and construction spending data which suggested the economic recovery is not as robust as first thought. The Fed will be in no rush to raise interest rates. The Dow ended ahead 1.1% after a late rebound. But the tech-heavy Nasdaq remained in the red, dragged lower by a 16% fall in Sun Microsystems on news that Ed Zander, its respected chief operating officer, is to retire in July.

Another 18m Safeway shares were traded and the close was 11 1/2p higher at 315 1/2p, making a two-day gain of 24 1/2p. Britain's fourth-biggest supermarket was linked with a possible £6.8bn nil-premium merger with William Morrison, 8 1/2p better at 229p. French hypermarket giant Carrefour, linked with the grocer on Tuesday, said it was not interested.

Catering giant Compass advanced 12p to 439p on turnover of 31m. Six bullish broker notes landed on fund managers' desks telling clients to fill their boots. Commerzbank Securities said the stock has underperformed the Footise by 10% over the past two weeks, current trading is on track and the interims on 21 May will come up to scratch. Target price is 480p.

BT Group was friendless at 247 1/4p, down 10p, but its demerged mobile phone unit mmO2 edged up 1p to 44 1/2p. Salomon Schroder Smith Barney rates the stock a 'speculative buy'. 'Reports of its death have been greatly exaggerated,' the broker says. Marconi rose 2.45p to 12 1/4p on gossip of an imminent deal with its banks to restructure £2.2bn of debt.

Cairn Energy gushed 21 1/2p to 338 1/2p after Teather & Greenwood said 'buy' after an upbeat annual general meeting. Chairman Norman Lessels said the Lakshmi gas project in Western India was on target to start production of contracted gas sales in August.

Electricity group Viridian sparked 21p higher to 466 1/2p following the £111m disposal of its Open and Direct Consumer Financial Services businesses to a management buy-out team backed by Alchemy Partners.

AIM-listed tantalum miner Angus & Ross firmed 1p to 9 3/4p. The recent steep fall in the price followed the sale by one investor of 700,000 shares for personal reasons and was unrelated to current developments at the company. A recommendation by Irish broker Davy to buy up to 56p helped Kenmare Resources rise 2 1/4p to 18 1/4p. Its £11.3m rights issue at 14p closes today. The cash will be used to explore its main asset, the Mona titanium deposit which stretches along the Mozambique coast.

Buying on asset grounds lifted leisure group Gaming International 6p to 69 1/2p. Coffee Republic edged up 1/2p to 6p after retailing entrepreneur Julian Richer bought a further 7.8m increasing his holding to 10m, or 4.45%.

The appointment of Robert Baird as financial adviser and broker proved a bullish signal for trainset and modelmaker Hornby. It steamed 13 1/2p ahead to 370 1/2p. Cheerful Scout, the Soho-based multi media and animations specialist, made a satisfactory debut on AIM. Placed at 2 1/2p, they closed at 3p on turnover of 2.9m.