Leaving aside Alliance & Leicester for the moment, retailer Next is starting the New Year in style. Ahead of a trading update tomorrow, its shares are up 47p to £16.71.
Apart from the hope that the group has enjoyed a positive Christmas, Next is also benefiting from an upbeat note this morning from Credit Suisse. The bank put an outperform rating on Next, as well as Marks & Spencer, up 3.5p to 563.5p.
Overall, Credit Suisse is cautious on the UK non-food sector, until the extent of any consumer downturn becomes clearer. But it does believe takeover activity is possible. "We expect merger and acquisition activity to emerge as a major theme in 2008," it said. "We expect consolidation activity between the UK sector's companies, driven by valuation, the need to contain costs and the possibility of doing deals without private equity intervention. We also expect that financial markets will stabilise in due course, re-activating private equity interest."
At Alliance & Leicester, the bank's shares are now 13% higher after a report in the Financial Times that Abbey National owner Santander had broken off takeover talks last month but may yet return to the fray.
The talk lifted other banks - and not just possible takeover targets. Barclays is up 11p at 515p and Lloyds TSB, one of the Guardian's share tips for 2008, 5.75p higher at 477.75p.
The FTSE 100 now stands 39 points higher at 6495.9, with the FTSE 250 up 30.5 points at 10688.3
On the downside Cairn Energy - which made a strong run at the end of the year - is down 74p at £30 while retailer Game Group has been hit by profit taking, falling 10.75p at 239.25p.
