Doubts over Icelanders' strategy spark a retreat

Yes the Icelanders are coming but it will be some time before one of them buys another UK company outright.

Yes the Icelanders are coming but it will be some time before one of them buys another UK company outright. That was the view in the City yesterday as investors forced lower all those stocks where Icelanders have been tipped as likely predators. Leading the fallers was Singer & Friedlander, down 22.25p to 279p, with traders pointing out that shares in the merchant bank have soared more than 50 per cent since Kaupthing Bunadarbanki and Burdaras built a collective 28.8 per cent stake.

EasyJet, which saw Icelandair declare an 8.4 per cent holding on Friday, gave up 5p to 147p as it has become apparent that a takeover of the struggling low-cost airline is unlikely for now. The Nordic raiders have made it clear that their holding in easyJet is just an investment although they have said that they may add to it in the short term.

Credit Suisse First Boston believes Icelandair's involvement has put a floor under easyJet's share price at about the 130p level but it warns that the company will continue to suffer from the double whammy of depressed yields and a high oil price for some time to come.

Meanwhile, Geest gave up 4.5p to 544.5p - Bakkavor, the Icelandic chilled foods specialist, has a 20 per cent stake in the group - and the stock broker Numis Securities, which is said to be in the sights of Landsbanki, fell 7.5p to 655p.

The retailer Baugur is in fact the only Icelandic company to have bought out a UK-listed company outright. Last year it acquired Hamleys, the toy shop, for £48m and it is looking at buying Big Food Group.

On a bad day for blue chips, BOC stood out, registering a 6.5p rise to 881p, as bid rumours again resurfaced at the industrial gasses group. Last week, BOC shares were set alight by reports that the group had received a takeover approach from its German rival Linde. Analysts have long argued that a tie-up would be a logical move for both companies. The FTSE 100 index closed down 50.9 points at 4,564.5 as only five stocks finished the session in positive territory.

Among them was Allied Domecq, which shrugged off a downgrade by Credit Suisse First Boston, to gain 0.5p to 479p. Diageo was not so lucky, losing 8.5p to 716.5p, as UBS downgraded its rating on the drinks giant to "neutral" from "buy". The broker believes that Diageo has disappointed some shareholders by not returning as much of the £1.2bn the group got from the sale of its stake in General Mills as expected. The company has said that it will use half of the money for a share buy-back and the other half for debt repayment.

Speculation that the famous City financier George Magan is plotting a takeover of J Sainsbury drove the supermarket group sharply higher in early trading. But, as the session wore on, analysts poured cold water on the talk. Dresdner Kleinwort Wasserstein said: "We continue to think that any bid is unlikely to be forthcoming before the release of full-year accounts in May."

All those companies with exposure to the ever-weakening dollar took a pasting. Smith & Nephew, off 15p to 464.5p, and UBM, 16.75p weaker at 453.5p, were hit particularly hard. Building materials duo Hanson, down 3.5p to 400.5p, and Wolseley, 6p lower at 913p, also suffered from the fall in the US currency.

Merrill Lynch did its best to discourage investors from exposure to East Surrey Holding as it warned that the upcoming review of the water industry by the regulator Ofwat is by no means certain to be benign for the company. The US broker fears that the review could threaten East Surrey's dividend prospects and so slapped a "sell" rating on the stock. However, investors brushed aside these concerns and drove shares in the water group 0.5p higher to 350p.

At Mondas, the software specialist, a dispute broke out between Tom Simon, the former chairman and chief executive, and the present board. Mr Simon, who controls 18 per cent of Mondas, is believed to be keen to regain his old position. Such a move is being resisted by the current management. To strengthen their position, Colin Peters, the group's chairman, bought 150,000 shares at 20p each.

Aztec Resources added 0.37p to 5.37p as the group's Western Australia iron ore project delivered a positive surprise for investors. Aztec said that it has made a significant step towards becoming a good-sized iron ore producer.

ADDleisure made a strong debut on AIM, posting a 20 per cent jump to 6.25p in its maiden session. The group, which hopes to capitalise on opportunities in the leisure and fitness sectors, boasts Alan Fisher, the former chief executive of Homes Place, and David Turner, the founder director of LA Fitness, as chairman and chief executive respectively. ADDleisure raised £1.5m at 5p.

Market Movers

↑ Warner Chilcott 837.5p (up 19p, 2.3 per cent). Confirms that it has received a takeover offer at 837p-a-share.

↑ NHP 247p (up 4p, 1.7 per cent). Investors await bid developments.

↑ Westbury 369p (up 2.5p, 0.7 per cent). Investors return to the house builder ahead of results due out later this week.

↑ Bright Futures 6.62p (up 0.87p, 15.1 per cent). Raises £87,000 from a placing of new shares at 6p each.

↑ Global Energy Development 191.5p (up 20p, 11.7 per cent). Begins to put a rig in place to develop its oil well in Colombia.

↑ Braemar Seascope 329p (up 27.5p, 9.1 per cent). Directors say they are confident that the group's full-year figures will exceed market expectations.

↑ Sterling Energy 20p (up 1.5p, 8.1 per cent). Confirms that it is in talks aimed at a major investment by the company in West Africa.

↑ Deltex Medical 33.5p (up 2.25p, 7.2 per cent). Charles Stanley raises £1.25m for the company via a placing of 4.6 million shares at 27p each.

↑ Formjet 5.25p (up 0.13p, 2.5 per cent). Lyndon Chapman, the chairman and chief executive, discloses he bought 100,000 shares at 5.37p each.

↓ William Sinclair 54p (down 12.5p, 18.8 per cent). Identifies accounting irregularities at its horticulture business.

↓ Brainspark 0.42p (down 0.08p, 16.0 per cent). Trading update from the group fails to inspire.

↓ TradingSports 23.5p (down 2p, 7.8 per cent). Ray Ranson steps down as an executive director.

↓ ARM Holdings 94.5p (down 2.5p, 2.6 per cent). Profit-taking after last week's strong gains.

↓ ITV 101.25p (down 3.5p, 3.3 per cent). Investors worry about the effect on the group's business model of personal video recorders.

↓ Emap 770p (down 16p, 2.0 per cent). Unveils plans to invest £16m in a new women's weekly magazine called Grazia.

↓ WPP 523.5p (down 12p, 2.2 per cent). Nervousness ahead of today's third-quarter figures.