Shares slip as profit-takers sink claws into recent gains

LONDON REPORT: Shares slipped yesterday as profit-takers sunk their claws into sectors that have benefited most from the recent bounce.

FTSE 250: 5,019.60 (-31.0); FTSE SmallCap: 2,105.80 (-12.10)

Poor corporate news flow from Wall Street further damped sentiment, sending the FTSE 100 0.5 per cent lower to 4,129.1, with the FTSE 250 0.6 per cent weaker at 5,019.6. Volume was 2.4 billion shares.

The few significant gains London could muster were largely driven by the latest bout of, mostly reheated, takeover and merger talk.

Aerospace and defence group BAE Systems was the standout blue-chip gainer, rising 4.1 per cent to 154p amid fresh hopes of a takeover approach. Reports over the weekend suggested the company had rebuffed an approach from French peer Thales and had told the UK government it was planning a merger with either Lockheed Martin or Boeing.

Among the mid-caps, security group Chubb rose 6.7 per cent to 68p on reports that its board would meet this week to discuss a 75p-a-share offer from US group United Technologies, after the companies reached agreement on a revised offer in the wake of Chubb's April profits warning.

Canary Wharf rose another 4.6 per cent to 275p, building on Friday's 46 per cent surge, after Morgan Stanley, one of its tenants, confirmed it was one of the parties in talks with the Docklands property group about a possible offer.

And radio group GWR rose 5.8 per cent to 211½p as continuing sector consolidation hopes built on balance sheet strengthening.

But the movements were not all one way. Struggling advertising group Cordiant Communications slumped 25 per cent to 5¼p amid reports that it was in exclusive negotiations with sector heavyweight WPP Group about a possible takeover.

Dealers had been hoping for a bidding war involving France's Publicis, and any bid from WPP is tipped to come in at just 3p a share. WPP was 1.9 per cent weaker at 503¾p.

Transport group Stagecoach slid 4.6 per cent to 56¾p amid general disappointment at the £176 million it has received for selling Hong Kong Citybus to local group Chow Tai Fook Enterprises. Stagecoach said the sale was due to limited opportunities for further growth in the region, Hong Kong's uncertain economic climate and growing levels of regulation.