WITH stock market indices behaving like the late 1990s, a bull run was back in full swing, so it was perhaps no surprise that yesterday should see the emergence of the TMT mega-merger tale to end them all.

According to La Tribune, a French newspaper, Vodafone Group is considering making a full takeover bid for Vivendi Universal after losing patience with the snail-like pace of talks to buy out Cegetel from the troubled media conglomerate. It claimed Vodafone would side-step any problems with the French Government by simultaneously selling Vivendi’s other key assets, such as Canal Plus, the pay-TV group, and its 40 per cent stake in Vivendi Environnement, the water utility, and says preliminary contact with Canada’s Bronfman family, Vivendi’s leading shareholder, has been “positive”.

Sources close to Vodafone gave short shrift to the tale, while analysts believe the group is more inclined to improve its terms for Cegetel, which controls SFR, the country’s second largest mobile operator. Vivendi closed up 10 per cent, with Vodafone 7p ahead at 101p, although both gains owed more to a market-wide squeeze than the credibility of the tale. With bears covering short positions and fund managers fearful of missing the start of a rally, the FTSE 100 leapt 198.7 points to 4,130.3.

Cable & Wireless rose 8¾p to 136¾p as Investec Securities suggested that the telecoms carrier is likely to announce its withdrawal from the US at its first-half figures on November 13. The broker believes such a move would entail restructuring costs of £800 million, but would pull its key C&W Global division back into break-even in the UK and Japan. British Land rose 13p to 465p as Laxey Partners said it had cut its stake to 2.85 per cent.

Scottish & Newcastle improved 12½p to 525½p amid strong indications that the previously flagged disposal of assets in its managed pub business will take place in two or more tranches rather than in the expected single sale. The first tranche, comprising about 500 pubs, is expected to be offloaded in the early part of next year, realising between £500 million and £800 million. The process is expected to take the form of a sale of the property assets, with S&N retaining a contract to continue operating the pubs. WestLB Panmure said the sale, together with a possible small-scale acquisition to plug the earnings gap, should ensure the feared dividend cut did not materialise. The broker raised its recommendation on the stock from “underperform” to “neutral”.

NEW YORK: Surprisingly strong earnings from Citigroup, General Motors and Johnson & Johnson sent the Dow Jones industrial average soaring more than 375 points. It closed 378.28 points up at 8,255.68.

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