Market Report: Hays reaps rich harvest on talk of European buy

IS HAYS about to return to the corporate action trail?

The business services group was in rampant form yesterday as late whispers of a deal triggered a round of buying.

The last-minute rally made the personnel-to-distribution giant the best performer in a see-sawing FTSE 100 index, thanks to a 60p rise to a 919p all-time high.

The late spurt was fuelled by talk that Hays is lining up a big buy in Europe. The company has made no mystery of its desire to expand on the Continent and is believed to have been looking for a target for some time.

Well-travelled dealers said that the cash-rich Hays could buy a number of companies in Europe, but their hot tip was the Dutch group Vedior.

The Amsterdam-listed company is the world's third largest personnel recruiter and would boost Hays' staffing division.

One of Vedior's main attraction is that it is cheap after a near 50-per- cent slump in its shares following a profit warning earlier this month.

It is also well-represented in Europe, with a big operation in France, and would add to Hays' continental coverage.

Not everybody agreed with the acquisition story. A small but vociferous minority of dealers rekindled talk that Hays could be bought by a rival such as Rentokil Initial, down 1p to 241p.

Remaining blue chips had a day of two halves. They spent the morning and early afternoon in the red as brokers locked in profits and the Dow opened lower ahead of the Thanksgiving weekend in the US. However, a rebound on Wall Street just before the London close helped the domestic bulls to push the leading index 27.6 higher at 6561.8.

The Dow-inspired turnaround did not feed through to the more insular smaller indices. The FTSE 250 broke its 11-day winning spell, falling 8.4 to 6113.8, while the SmallCap ended 0.3 down to 2854.7.

The financials played a key part in the FTSE 100's rebound thanks to analytical support and bid rumours. Broker DKB gave mortgage banks a push with a learned note.

Halifax, 40.5p higher to 737p and Alliance & Leicester, 23.5p better to 874p, were two beneficiaries. The two were also helped by corporate action talk. A&L, in particular, is thought to be looking for partners and a chief executive.

Insurer Legal & General, up 1.25p to 179.25p, is also a mooted target.

Vodafone AirTouch also helped the leading index, rising 6.5p to 279.5p on fading fears of a defeat over Mannesmann.

Retailer Kingfisher jumped 31.5p to 660.5p on whispers of good trading and of a deal, possibly in Europe. However, other stores continued to be hammered. Marks & Spencer plunged 15p to 241.5p after broker SG slashed its target to 225p from 250p.

Safeway dropped 3.75p to a record low of 168.5p ahead of today's interims. Any lower and a predator could strike. Storehouse plunged 1p to 49p as its pre-Christmas sales continued to unsettle investors, while House of Fraser fell 1p to 58p. After the close it confirmed that its annual "one- day spectacular" sale, with discounts of up to 20 per cent, will take place today.

Interims from fashion chain New Look, due out today, will provide further evidence of the state of the high street. The shares lost 3.5p to 151.5p.

It was game over for computer games retailer Electronics Boutique, down a massive 32.25p to 45.75p in huge volume after a disastrous profit-warning.

Media stocks fared better. Carlton beamed 26p better to 550.5p on sparkling results from ONdigital partner Granada - down 18p to 542.5p on profit- taking - and returning bid talk.

Pearson jumped 42p to 1495p after the Financial Times website linked up with on-line auction house Icollector, up 40p to 840p in the junior Ofex market.

No such luck for Invensys. As predicted the engineer's results and strategy disappointed and the stock fell 21.25p to 302.25p.

Gas group Centrica leaked 9p lower to 155p on fears that a forthcoming regulatory review will squeeze margins. Utility ScottishPower dropped 5p to 562.75p despite receiving final approval for the acquisition of US rival PacifiCorp. The stock should now rally as the company's index weighting increases. Builders merchant Wolseley debuted in the FTSE 100 with a 22.25p fall to 491p.

Drug group Bioglan did much better, starting life as a midcapper with a 52.5p rise to a best-ever 585p. Its perfomance was bettered only by fund manager Perpetual, up 362.5p to 3432.5p on returning bid talk.

Car dealer Inchcape motored 21p ahead to 273.5p on rumours that its on- line service Autobytel is to announce a major deal, while United Biscuits put on a tasty 3.25p to 228.25p on whispers of that a bid is near.

The struggling leisure group Rank fell 11p to a worst-ever182p after telling broker Deutsche Bank that like-for-like sales at the Hard Rock Cafe are still down and that the sale of Odeon Cinema should be completed in the next two months.

Two newcomers started with a rise. Domino's Pizza delivered a 49p rise to 89p, while car-leasing tiddler Goodwood more than tripled, rising 24.5p to 34.5p.

The rest of the minnows had an exciting session. Jeffrey Chapman, founder of sport TV production company Sportsworld Media netted pounds 5.6m after selling 10 per cent of its stake to increase liquidity. The shares rose 23.5p to a record 320p after Sportsworld unveiled an Australian acquisition and a pounds 31.7m placing.

Builder Alfred McAlpine ended 7p lower to 228p on rumours that jilted predator Brunswick had dumped its 3 per cent stake. Rival Bovis Homes lost 0.5p to 301p on whispers of a large sale by an institution.

Ofex-listed videophone maker Motion Media fell 5p to 140p despite strong rumours that it had signed up American group Teleco as its US new distributor.

Bob Morton's Harrier, the software security group, soared 63.5p to 250p on talk of a imminent bullish analyst's note. Drug tiddler KS Biomedix jumped 36.5p to a record 434p on whispers of a licensing deal for its arthritis product.

SEAQ VOLUME: 1.618bn

SEAQ TRADES: 99,453

GILTS INDEX: 106.37 -0.46

f.guerrera@independent.co.uk

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