Enterprise Inns was among the winners after another frantic day on the trading floors, with shares in the pubs operator hitting a record high as hopes revived that it could convert into a real estate investment trust (Reit).

The new twist in the tale was supplied by Geof Collyer, an analyst at Deutsche Bank. He argued that Enterprise may not have to split into separate operating and property companies to achieve Reit status.

Companies cannot generate more than 25 per cent of their profits from sources other than rent to make use of the tax shield, whereas tenanted pub companies typically generate about half their profits from rent. However, Mr Collyer argued that exclusive beer sales agreements to tenants, the other main source of profit, are effectively “wet rent”. If HM Revenue & Customs could be persuaded to accept that definition, Enterprise could qualify without splitting – a move that Ted Tuppen, its chief executive, has effectively ruled out.

Enterprise shares closed up 27½p at 690p ahead of results next week. Deutsche Bank said that conversion would enable the company to triple its dividend payouts, implying a 2008 yield of almost 8 per cent against forecasts of 2.8 per cent.

Outside the blue chips, Ladbrokes jumped 18p to 431½p on renewed gossip that Apax, the buyout fund, was weighing up a bid. To some, the talk of private equity interest looked credible. Recent European Union rulings have forced Germany and Italy to open their gambling markets to external competition, providing expansion potential that may not be fully reflected in market forecasts. However, few traders were expecting a deal to appear before autumn and sources said that Ladbrokes saw no reason to put itself on bid alert.

In the wider market, the FTSE 100 index closed down 0.8 points at 6,549.6, ahead of today’s interest-rate decision. That was despite the mining sector surging on Rio Tinto takeover theories. BHP Billiton, up 64p to £12.49, was again pinned as the likely buyer.

Rio shares closed up £3.55 at £36.60 as Credit Suisse analysts said that the shares could be worth £42 to a predator. Shares spiked in the last moments of trade – partly on talk that a deal was imminent and partly because one hapless dealer had logged an order in Australian dollars rather than sterling.

DSG International rose 8.6p to 176.3p on hopes that it will exercise an option to buy a stake in Eldorado, Russia’s biggest electronics retailer. Also helping was a tip from Bernstein Research, which said that the Currys owner was in recovery mode and could become a leveraged buyout candidate.

Hanson was up 17½p to £10.47½ after quarterly results from HeidelbergCement, its confirmed stalker. With the numbers now out of the way, some expect the German group to make an indicative approach of more than £11 per share within the next few days, potentially sparking a bidding war.

While competition concerns would lock out many of Hanson’s peers, there has been speculation that bidders could be prepared to partner private equity funds – or each other – to secure what is likely to be the aggregate sector’s last big deal. “The competition regulator is only going to allow one more merger, so the likes of Cemex, Holcim and Lafarge have no choice but to take a look,” one investor said.

News that Cazenove had cut Prudential off its “outperform” list sent the insurer 20p lower to 782p. Cazenove doubted whether activist shareholders would be able to force a break-up of the group. Profit-taking weighed on Tate & Lyle, down 12p to 652½p, after it revealed plans to sell parts of its European starch operations for up to £220 million. Most traders missed a line in the statement revealing the group was planning to return cash to shareholders in excess of the sale proceeds.

New York: Wall Street wobbled, then regained its stride after the Federal Reserve told investors what they expected to hear: that inflation is still too high for comfort, but the central bank is holding interest rates steady. The Dow Jones industrial average was up 53.80 points to 13,362.90, another record close.

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