Market report: Tuesday close

THE stock market revival accelerated today as share prices reached their highest since June 2002. A combination of short-covering and the belief interest rates may have peaked in this cycle are behind a new wave of enthusiasm which has enabled investors to shrug off the ill-effects of another rise in the crude oil price on world markets above $50 a barrel.

At the close, the FTSE 100 index sported a rise of 25.30 at 4707.10, having earlier touched 4708.9. This afternoon on Wall Street, the Dow made a nervous start with investors fretting about fuel costs.

City speculators say Man Group looks vulnerable to a takeover, having seen its price plunge from a peak of 1856p this year to last week's low of 1155p.

Today, it rose 47p to 1296p, for a two-day lead of 61p. City gossip says Man could soon find itself on the receiving end of a bid from the likes of Merrill Lynch.

Hedge funds have lost some of their attraction to investors in recent months because of heavy upfront costs and their inability to function in becalmed market conditions. Only last week, Man reported a marked slowdown in the amount of new funds it had attracted.

Speculation has also been fuelled by reports that chief executive Stanley Fink, the driving force behind Man, has been unwell, while directors have been buying stock in the marketplace.

Traders say the new-found optimism and short-covering that has carried the Footsie higher may be behind Man's share price revival.

Internet bank Egg rose 3p to 97 3/4p after receiving an offer for its French savings and online operation, this time from ING Direct France.

The world's biggest miner, BHP Billiton, rose 12 1/2p to 598p after confirming plans to spend £566m buying back its own shares. However, the buyback will be pitched at prices ranging from 5% to 14% below the ruling market price.

Building products supplier Wolseley dipped 15 1/2p to 955 1/2p despite US investment house Morgan Stanley raising its target from 940p to 1064p and upgrading its earnings forecast for 2006 and 2007 by 7%.

Further takeover talk lifted troubled engineer Invensys 1 1/2p to 13 3/4p as a massive 90m shares changed hands. A line of 5m went through at 13p.

The stronger oil price boosted BP by 14 1/2p to 549p following yesterday's trading update. A line of 55m shares went through on the ticker at 544p which have been part of the company's buy back programme.

Alternative Investment Market-quoted stockbroker WH Ireland climbed 13p to 89p on news of a bid approach. The company is worth £14.3m.

The £106m acquisition by GUS-owned Experian of address management software specialist QAS has gone down well in the Square Mile.

Broker Seymour Pierce's Rhys Williams says it is a complementary business to Experian and should help it strengthen its hold on key markets. GUS slipped 8p to 904 1/2p.

Investment bank Credit Suisse First Boston warns third-quarter trading updates from several of Europe's big players later this month could depress our own ICI , up 1 1/4p at 222 1/4p, where it has repeated its underperform rating.

No-frills airline easyJet slid 4 3/4p to 126 1/4p after broker UBS repeated its neutral stance and cut its 12-month target from 165p to 150p.

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