MUCH intrigue was introduced into the British market as the Hanson Group's 12.5 per cent stake in the National Grid was sold to one of the market's biggest market-making firms, HSBC James Capel.
The HSBC purchase, at a big discount to the ruling market price, produced a wave of intense speculation that a bidder was lurking in the background.
By the close of trading, however, there was no hard evidence that the shares had been passed on to another party, although HSBC said it had hedged the entire market risk of the deal via a Middle Eastern investment group.
The National Grid story helped ginger up a stock market worried about the potential for a big sell-off, firstly as London takes on board the results from the British local elections tomorrow and, secondly, as global markets react to US employment numbers due out on Friday.
Dealers said the market had already factored in a doomsday performance by the Conservatives tomorrow, and had already done much of the worrying about stories of a further threat to Mr John Major, the Prime Minister.
There remained, however, the big hurdle of the March payroll figures, due on Friday. Even the most hard-bitten market-makers remain extremely cautious about the US numbers, which have in the past been the catalyst for triple-figure falls in the Dow Jones Industrial Average.
Nevertheless, the London main market index, the FTSE 100, put on a good performance to close 8.7 higher at 3,817.9, well clear of the 3,800 level that appeared to be on the cards on Monday.
Second-line stocks, unusually, underperformed their senior brethren, with the FTSE Mid-250 index dipping 2.0 to 4,551.8.
Sentiment at the outset was positive, with Wall Street's overnight 5.4 gain on the Dow Industrial index, plus the prospect of more bids in London, helping the FTSE 100 to rise some seven points in initial exchange.
The Grid placing and the absence of hard takeover news took the edge off the market, however, and share prices slipped back before moving ahead again over lunchtime.
Wall Street's uneasy opening, which saw Treasury bonds weaker and the Dow Jones Industrial Average off more than 20 points shortly after the start of trading in the US, prompted some nervousness in gilts and British equities. US markets had reacted badly to news of stronger-than-expected economic data.
But London regained its poise towards the close and ended the session in good shape. Traders thought the market may have overreacted on the downside to the expected poor performance of the Tories in tomorrow's elections, and that the recent downbeat economic news may still prod the Chancellor of the Exchequer, Mr Kenneth Clarke, into looking for another interest rate cut.
Turnover in equities expanded rapidly to 1.12 billion shares, the highest for many weeks, and a figure boosted by the 236 million turnover in National Grid, which accounted for 20 per cent of the total. Customer activity on Monday came out at a relatively moderate £1.6 billion sterling.
