The takeover talk around Carphone Warehouse refuses to go away but analysts continue to be sceptical about whether there is anything in it.
Yesterday the company's shares jumped 24.5p to 328.5p on suggestions that its US partner, Best Buy - which already owns 3% - may be lining up an offer. This made it the best performer in the FTSE 100 index.
But traders said there could be other explanations for the rise. The company's shares are heavily shorted and with about half in the hands of the founders Charles Dunstone and David Ross, they are subject to volatile movements amid flurries of speculation. In reality, Dunstone is seen as an unlikely seller and it is hard to believe Best Buy would be interested in Carphone's UK sites, which are substantially smaller than its own US outlets.
Overall, there was quite a turnaround in the leading index yesterday. At one point the FTSE 100 was nearly 150 points lower on continuing concerns about the effect of the credit crunch on UK banks. There was some talk that Barclays, for example, would cut its dividend, and analysts are saying that a major rights issue at a UK lender cannot be ruled out.
A negative note from Panmure Gordon on the sector, with sell ratings on most of the big players, did not help. "It is the continuing falls in house prices, both here and in the US, that is of greatest concern," Sandy Chen, an analyst, said. "As long as house prices keep falling, mortgage bad debts will keep rising, because banks will keep tightening their lending criteria."
So Barclays dropped 8.5p to 470p, while Royal Bank of Scotland fell 3.25p to 382p. Alliance & Leicester lost 19p to 653p after downbeat noises from two credit-rating agencies, Fitch and Standard & Poor's. But Standard Chartered recovered from an early fall after it stepped in to support its structured investment vehicle Whistlejacket to the tune of $7bn, and closed 13p higher at £16.65.
With the takeover speculation surrounding Carphone and a positive start on Wall Street, the FTSE 100 flipped back into positive territory and closed 42.5 points higher at 5879.8.
BG was boosted by news of record profits at Royal Dutch Shell, and by the announcement of increased gas production at its jointly owned Karachaganak field in Kazakhstan. Shell edged up 2p to £17.91 after its figures, while BP - which reports next week - rose 7.5p to 532p.
Smith & Nephew was again a leading riser, up 28p to 682p as JP Morgan followed Deutsche Bank in raising its price target for the medical group.
The leading FTSE faller was Friends Provident, down 16.4p to 138.8p after dealers decided its restructuring proposals left much to be desired and its dividend cut was unwelcome.
South African-quoted businesses continued to be out of favour. The recent power cuts in the country are likely to hit consumer stocks such as SABMiller, down 8p to £10.79p, and suggestions from the country's central bank yesterday that economic growth was slowing helped push the financial group Old Mutual 7.4p lower to 124.3p.
The pubs group Mitchells & Butlers dropped 27.25p to 445.75p after Wednesday's bid-fuelled increase. Analysts were increasingly sceptical about a takeover, with one potential predator, Punch Taverns, seemingly telling analysts it was not one of the companies that had approached M&B. Punch closed 13.5p lower at 696p.
Debenhams dipped 0.25p to 72.5p despite growing talk that Micky Jagtiani, head of the Dubai-based retailer Landmark, may bid. Jagtiani's investment group, Milestone Resources, has just increased its stake in the department store chain from 8.39% to 9.13%, and has links with the Icelandic group Baugur, which owns 13% of the retailer. Jagtiani and Baugur have reportedly been looking at a possible joint bid for the US department store Saks, and yesterday the entrepreneur was reported as saying the two were looking to buy in the US and the UK.
Lower down the market, the online payment business Neteller added 4.25p to 64.75p after Alberta, an investment vehicle associated with the company's founders, said it no longer had a notifiable stake. Earlier this week it said it held 4.94%.
Analysts said if the stake had gone to one buyer it could lead to takeover speculation, and company sources said Neteller was in the middle of an UK and US investor roadshow that was generating interest in the shares.
Staying online, Sportingbet added 0.75p to 42p as Peter Dicks, who becomes non-executive chairman today, became the latest director to buy shares in the gaming group, purchasing 50,000 at 41.5p.
Finally, the technology minnow Angle added 10.25p to 38.75p as it said it had received a takeover approach.
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