Flurries of profit-taking by domestic investors, a worrying showing by Wall Street and a steep decline in Vodafone AirTouch, Britain's second biggest company by market capitalisation, brought a disappointing finish to an otherwise buoyant week in British equities.

But underlying sentiment in London remained reasonably bullish - the midcap and smallcap indices maintained their upward progress - and many took the view that the recent burst of takeover activity would continue. Dealers said the next burst of action may well come in some of the FTSE 100 stocks, especially in telecoms, banks and oils.

The main stock highlight was the poor performance of Vodafone AirTouch amid ever increasing speculation that the cellular phones group is about to launch a hostile bid for Mannesmann of Germany.