Only a few days into the New Year and another FTSE 100 company surges on takeover speculation. Granted, the move is not as dramatic as Alliance & Leicester's, which jumped more than 16% on Wednesday after news that Spain's Santander had been talking to the bank.
But that is understandable, since the talk surrounding Carphone Warehouse this morning is rather more vague. There were suggestions that Vodafone might be interested in the mobile phone retailer, while traders also pointed out that the company's US partner bought a 3% stake last year.
A more prosaic reason for this morning's 6% rise in Carphone's shares to 351p was the idea that it had a good Christmas, especially in terms of its sales of Apple's much-hyped iPhone.
Other retailers were suffering, however, in the wake of DSG International's revelation of a dramatic decline in profits. Analysts were falling over themselves to downgrade the company, and its shares lost another 3.5% to 75.25p. Jeweller Signet fell 5% to 60.75p as Credit Suisse cut its price target from 75p to 65p, while Marks & Spencer lost 13p to 529.5p after Citigroup reduced its forecast from 750p to 650p.
Citi said: "Numerous external sources of data suggest that the UK clothing market has deteriorated sharply since October, and that more importantly there was no "get out of jail" card for the industry in the last week ahead of Christmas. In the light of this data, and [yesterday's] Next statement, we cut our forecasts for both third quarter revenues and full year profits before tax."
B&Q owner Kingfisher was also hit by the overall gloom, down 4.7p to 134.8p, while Next lost 30p to £15.22..
Elsewhere Cairn Energy dropped 67p to £28.80 as it confirmed reports that its Magnama-1 well in Bangladesh had produced disappointing results. The well will be plugged and abandoned.
ITV slipped 1.7% to 81.3p after a bearish note from Numis. Analyst Lorna Tilbian has moved from hold to reduce, saying: "We believe free-to-air broadcasters such as ITV are the most exposed in the sector to an advertising slowdown, due to the high proportion of their revenue derived from advertising and their high operational gearing. We believe ITV's top-line outlook for 2008 remains uncertain in light of the challenging macroeconomic environment and this implies further forecast downside risks.
"Moreover, the Competition Commission's recommendation that BSkyB reduce its 17.9% stake in ITV to below 7.5% creates an overhang in an uncertain market. Our target price of 74p equates to a PE of 16 times and places the shares in reduce territory."
On the upside, miners moved higher on consolidation hopes and a strong copper price, helping to pull the FTSE 100 38 points higher to 6517.8.
Finally, an Alliance & Leicester update: its shares are 3p lower at 755p on profit taking. Also taking some of the steam out was a comment from National Australia Bank - mooted as a possible bidder - that its focus in the UK was on organic growth.
