A financial spread betting firm suspended trades on Gresham Hotel Group last Thursday after a small number of punters tried to place unusually large bets on upward movement in the hotel group's shares.

Gresham shares gained 13 cents, or 12 per cent, the following day on news of a takeover approach.

Share Spread, the financial trading division of Sports Spread, received more than a dozen telephone inquiries on Thursday from clients looking to bet on Gresham's price going up.

"It was quite clear that certain individuals had information ahead of the announcement," said Share Spread marketing manager, Mr Tony Judge.

He explained that one individual came to the particular notice of the company when he tried to place a €10,000 bet on each cent movement in the shares.

If the trade had been accepted, the client would have won some €120,000 overnight.

Mr Judge said the company did not accept bets of this magnitude on any share, but would be particularly reluctant to do so on a small-cap stock such as Gresham.

"Had they tried to place a trade for anything up to a couple of hundred euro per point we would probably have accepted it, but this was naive in the extreme," Mr Judge said.

Share Spread takes an average of about 200 bets on Irish stocks each day, but most transactions are limited to larger firms such as CRH or AIB. Mr Judge said these bets typically range between €5 and €100 per one-cent movement.

Almost all of those who tried to place bets on Gresham last Thursday were new customers who did not have accounts with the company.

A similar trend was noted by the betting firm before Royal Bank of Scotland's takeover of First Active was made public last month. Some 30 new accounts were opened in the weeks preceding that announcement.

The appeal in making bets on share movements rather than buying into the stocks themselves lies principally in taxation benefits, since the betting transactions do not attract capital gains tax, stamp duty or stockbroker commission.