Market Report: Carphone boosted by talk of Norman conquest

It is only days since Archie Norman, the former chairman of Asda and the Conservative Party, was thought to have lost out in the auction for Phones4U. Now the talk in the market is that he is about to launch a bid for the rival telephone retailer and service provider, Carphone Warehouse, in a deal that could value the shares at up to 330p each.

Mr Norman has been out of the markets since selling Energis, the telecommunications group he chaired, to Cable & Wireless almost exactly a year ago for £740m. He is thought to have garnered support from several large hedge funds for his last-minute bid for Phones4U and traders said the same hedge funds were likely to back him again.

However, not all traders believed the story. One said: "Carphone Warehouse is struggling to make the most of its first-mover advantage in the home broadband battle and [the chief executive] Charles Dunstone is unlikely to sell out at this crucial point in the company's development." The company also denied the rumours. Even so, volume in Carphone was good, with more than 15 million shares changing hands as the stock rallied 7.75p to close at 263.75p.

InterContinental Hotels was in demand before next week's results despite a target price cut by the broker Morgan Stanley. The US investment bank trimmed its target to 950p from 970p, but said concerns over the US hotel market were overdone and that it expected "solid" performance from the group. The shares added 15p to 864p.

London trading started poorly, as worse-than-expected UK inflation data prompted more talk of rate rises. The FTSE 100 was in negative territory for most of the session before more benign data from the US prompted a late rally. The blue-chip index closed 27 points better at 5,897.9.

Good first-quarter numbers from British Land gave the property sector a boost, although profit-taking resulted in the UK's second-largest landlord falling 12p to 1,364p. The rival Hammerson was the main beneficiary, adding 27p to 1,291p, while Liberty International rose 8p to 1,135p.

The best performer in the mid caps was the plant hire group Ashtead. The shares have fallen dramatically since last month's rights issue, which raised £150m towards the $1bn (£530m) acquisition of the US rival NationsRent, but added 8p yesterday to close at 120p. Market makers said a couple of large sellers have been cleared out and the shares are starting to look attractive again, with the NationsRent acquisition expected to be earnings-enhancing in 2007.

London Clubs International, the casino group, was stronger as traders talked of a bid for the group from the gambling giant Ladbrokes. LCI is involved in nil-premium merger talks, thought to be with the rival Stanley Leisure. Shares in LCI have been little short of a disaster in the past six months, losing more than 30 per cent of their value, but traders said a counter-offer valuing the company at 120p per share could come this week. Ladbrokes denied the rumours late in the session, leaving LCI shares 1p better at 96.5p, having earlier hit 101p. Stanley Leisure fell 2p to 617.5p and Ladbrokes was 1p better at 386.75p.

Sellers continued to hammer Torex Retail after it warned on Monday it had moved into a first-half loss. The shares tanked another 11p to 45.5p, leaving investors nursing a 26 per cent loss since the start of the week. Torex burned more than £14m of cash in the first half, leaving a little more than £8m of cash on the balance sheet, and traders are talking about a rights issue to raise more capital.

For small-cap information technology stocks it doesn't get much better than an endorsement from Microsoft. Maxima Holdings, the AIM-listed provider of systems integration solutions, confirmed a deal with the software giant, sending the shares 13.5p better in early deals to 167p before a few investors banked profits. The shares closed 8p better at 161.5p.

The brokers Ambrian and Collins Stewart reiterated their "buy" recommendation on Monterrico Metals, the copper mining group with significant assets in Peru. Traders have been cautious about it in recent weeks after the appointment of a new Peruvian mining minister with a tough reputation, but investors were encouraged by the appointment of former British ambassador to Peru, Richard Ralph, as executive chairman, replacing Robert Guy. The shares rose 4p to 197.5p.

The alternative energy product developer Energetix enjoyed a solid first day on AIM. It raised £5.4m after a placing at 40p, and rose 6p to 46p, giving new investors a 15 per cent premium.