Yell Group was the latest company to be swept up by the takeover speculation bandwagon, with shares in the telephone directories publisher climbing on rumours that a private equity group was running the numbers on a leveraged buyout.

Some investors reckoned that the story looked plausible, given that the group’s core business would provide relatively stable earnings and could afford to carry more debt. A management-backed deal may also be attractive, given that the current team worked for the Apax consortium that bought Yell from BT Group in 2001, then brought it back to market in 2003.

Yell shares ended the day higher by 17½p at 588p, valuing the group at £4.5 billion. Analysts said that a deal in excess of 700p per share could be possible only if the buyer was confident enough about Yell’s expansion prospects.

Meanwhile, Hammerson rose 79p at £17.34 as traders remained convinced that the property group was a target either for a European peer or a private equity fund. Volume topped five million shares, above the daily average, as dealers reported strong interest from a number of US investors.

The wider market was buoyed by what most investors considered a benign Budget. The FTSE 100 index was up 36.5 at 6,256.8, its highest close in three weeks, having peaked at 6,287.5 in the moments after Gordon Brown pledged to cut corporate tax next year.

Smith & Nephew finished up 3½p at 645p. Analysts said the orthopaedic devices maker would benefit from more cash going to the NHS, as this should ease the block on elective surgery.

Airlines benefited from news that the Chancellor would not impose VAT on air tickets, with easyJet up 7p at 707p. British Airways, 16½p ahead at 519½p, was also helped by takeover gossip, even after Emirates denied a tale that it was interested in making a bid. Talk that BA could move for Iberia seemed the more credible tale.

News that pensioners will be able to claim a new grant to insulate their homes helped SIG, the market leader, up 22p at £12.45, and Wolseley, the No 2, 30p higher at £12.51.

Rank Group was one of the few casualties, falling 9¾p at 225p after Mr Brown introduced a graded tax rate for casinos and kept VAT on bingo participation fees, despite intense lobbying from the industry. Analysts estimated that the casino tax change would hit Rank’s earnings by £6 million this year.

Meanwhile, PartyGaming moved up 2p at 45p. The Gibral-tar-based company was unaffected by news that there would be no breaks to tempt the internet gambling companies out of their tax havens. Traders also noted that Germany will today decide whether to press on with legislation barring commercial internet betting and lottery operators.

Upbeat research from JPMorgan helped to boost SAB-Miller, up 24p at £11.06. The broker said it expected shares to rally ahead of a positive trading update from the brewer expected on April 12.

Among the mid-caps, UK Coal rose 24p at 500p after John Whittaker, the property investor, unexpectedly raised his stake in the group to 24.5 per cent from 21 per cent. It was his first purchase since September, when shares were below 200p.

Mr Whittaker was forced to issue a statement earlier this month through his investment company, Peel Holdings, that he had no intention of making an offer for the group unless a third party makes an approach.

Premier Oil took on 58p at £12.52 ahead of results due today. Shares were helped by chatter that the prospector could once again be in the sights of Dubai Energy, which reportedly pulled out of talks with the group in December.

Talk of takeover interest also lifted SSL International, the Durex condom maker, up 16¾p at 404¾p. New York: Shares soared on Wall Street after the Federal Reserve fuelled hopes that it will cut US interest rates by the summer in a bid to underpin America’s economy growth. At the close the Dow Jones industrial average was up 159.4 points to 12,447.50.

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