MARKET REPORT: Talk, talk, talk and more talk

The FT-SE 100 index fell 16.2 points to 3,033.2 and the FT-SE 250 index lost 5.6 to 3,471. Turnover was 669.6 million shares with 20,319 bargains reco rded. Government stocks were narrowly mixed.

Talk of deals helped the stock market produce just a scintilla of excitement as another day of boring indifference took its toll of traders' patience.

A clutch of stories went the rounds; Hanson bidding for Argyll; clearance for bid action to break out again over VSEL; and J Sainsbury buying the Texas do-it-yourself business from Ladbroke were the main offerings.

The Hanson/Argyll rumour is getting close to its sell-by date. But with Hanson showing signs of flexing its muscles for a big deal the market could be forgiven for resurrecting it. Argyll, the Safeway supermarket chain, would represent an usual diversification but Hanson needs to boost its British earnings.

Shipbuilder VSEL was excited by suggestions Whitehall was about to clear the way for British Aerospace and GEC to resume their battle for control. The market was happy to ignore the fact that the Monopolies and Mergers Commission is not due to report until March.

Sainsbury, which takes in the Homebase chain, was said to be talking to Ladbroke over Texas. Sainsbury wants to grow its d-i-y side and Ladbroke, contemplating a bid for Hilton Hotels of the US, could welcome the cash inflow.

There was also renewed talk that Cadbury Schweppes was preparing to strike at Dr Pepper/Seven-up, and vague rumours Albert Fisher, the food group, could descend on Hobson, a rival operation that has yet to live up to its promise.

Hanson greeted the speculation with a 2.5p fall to 237p; Argyll rose 5.5p to 265.5p. VSEL added 30p to 1,410p, British Aersopace 10p to 442p, but GEC, strong on Wednesday, slipped 1.5p to 293.5p. Sainsbury fell 1.5p to 414p; Ladbroke was little changed at 174p.

Cadbury fell 10p to 413p, Albert Fisher 1p to 44p and Hobson was unchanged at 23.5p.

There was some activity in one of the market's real bids. De La Rue, chasing Portals, jumped 26p to 965p while its target gained 14.5p to 1,039p. The action was largely technical, prompted by the closure of De La Rue's offer tomorrow.

The market lost early gains and the FT-SE 100 index fell 16.2 points to 3,033.2. Mexico and its likely impact on sentiment over other emerging markets was the main influence.

Saatchi & Saatchi's dramatic decline continued with the shares off 10.5p to 97p after touching 93.5p. Rank Organisation lost 22p to 381p as the market registered disappointment with the £620m received for its 40 per cent stake in Rank Xerox. The deal pr i ces RX at about £1.55bn against market estimates of £2bn.

A Kershaw jumped 368p to 1,263p as Rank decided to mop up the minority interest.

Eurotunnel's rally continued; up 13p at 321p. The shares are being helped by the growing passenger demand and their inclusion soon in the Paris CAC-40 index. Euro Disney, losing its CAC membership, fell 8p to 128p.

Northern Electric slipped 3p to 997p as international investor George Soros took a 1.33 per cent stake.

Another round of holiday trading statements had little impact. Sears fell 4.5p to 101.5p on a decline in second-half margins. Kingfisher, ahead of a trading statement next week, fell 6.5p to to 428p.

Cookson, the industrial materials group, rose 4p to 239p following an upbeat analysts meeting. Filtronic, makers of mobile telephone equipment, had another heady run, gaining 11p to 191p.

Black & Edgington, the new Ian Gowrie-Smith vehicle, shaded to 2.25p with 46 million shares printed. Eidos, the video editing group, rose 30p to 335p as it signed a deal to produce video playback systems.

Spring Ram, the bathrooms and kitchens group, was firm at 40p as a large lines of shares went through, fuelling speculation former chairman Bill Rooney was selling again.

Arion Properties, the residential property group where Jim Slater and friends have 43 per cent, is on the expansion trail. It has acquired six properties in Edinburgh for £400,000, satisfied in shares. More residential deals are expected. The group, soldoff from the Harmony property group, is traded on the backwater 4.2 market. The shares are 10.5p.

Chesterton International, the 200-year-old commercial property consultant and estate agent, has disappointed since it arrived at 100p last summer. The shares are 86p. But Societe Generale Strauss Turnbull believes they are a buy. It has made two acquisitions and analyst Simon Brown sees profits reaching £6.85m this year and £8.75m next.