After the bullish start to the New Year, there was an equally dramatic start to the week as another burst of takeover news produced an early surge in share prices.

But any expectations that the initial flurry of buying would carry the London indices into new ground were quickly dashed by persistent squalls of profit-taking.

The FTSE 100 index, London's benchmark, was driven up to within 11 points of its previous intra-day record on the back of fresh takeovers and mergers.

This included multi-billion-pound deals involving BAT's proposed merger with Rothmans, confirmation of merger talks between Enterprise Oil and Lasmo and a surprise bid from Imetal of France for English China Clays.

"After such a performance it does get difficult to resist taking profits," said one marketmaker.

At 6 p.m., turnover in equities had reached a reasonable 898.8 million shares, with non-FTSE 100 stocks accounting for 54 per cent.