Could Punch Taverns consider a move to release the value in its property portfolio? The prospect filled shareholders with hope as Goldman Sachs said the pub operator could benefit from becoming a real estate investment trust (Reit).

The US broker said such a move could lead to a significant increase in the group’s share price.

Analysts said the potential gains from a conversion were “compelling” and raised their target price from £12.80 to £15.30. Conversion to a Reit structure would, they said, support a valuation of £17.39.

The group has ruled out a switch in the near term, but that does not rule out a move in the future, the broker said, noting that the shares reflected only a “minimal” probability that the company would go through with a conversion.

Enterprise Inns said earlier this month that it would look into making the conversion. However, it wants reassurance from HM Revenue and Customs that it will be able to do so without splitting itself into an operating company and a property company.

Companies must make at least 75 per cent of revenues from property to avoid the split. Most pub companies are well below that level. However, Enterprise is arguing that it should be allowed to include revenues from selling beer to tenants, also known as “wet rent”. A positive decision for Enterprise could spur on rivals.

Goldman elevated Punch to its “conviction buy” list, helping the pub group’s shares up 35p to £13.79. Enterprise Inns added 3½p at 741½p.

The FTSE 100 index rose 55.3 points to finish at 6,676.7. Energy and utilities stocks saw a bout of profit-taking. Many stocks in the sectors have rallied in recent months on intensified speculation of likely mergers and acquisitions activity.

Drax, the coal-fired power station operator, headed the large-cap fallers, off 14½p at 786p. Centrica, the British Gas owner, was 3½p weaker at 379¾p. United Utilities ended 2½p lower at 769p and Severn Trent gave up 1p to £15.70.

Hammerson was in focus amid talk that British Land could launch a bid for the rival property group. Speculation about Hammerson’s future went into overdrive after John Nelson, its chairman, all but confirmed that the company was a takeover target. Hammerson ended the session 23p higher at £16.15. British Land put on 13p at £14.60.

Whitbread ticked up 4p to £18.98 ahead of the expected sale of its David Lloyd Leisure division to London & Regional, due to be agreed over the weekend. But some analysts are concerned that, instead of returning the proceeds to shareholders, the leisure group will use the proceeds to buy the Jurys Inn chain. The bidding for Jurys Inn, which has 14 hotels in the UK and six in the Irish Republic, has reached more than €1.1 billion (£750 million), which is believed to equate to a multiple of about 20 times underlying earnings in 2006 – well above recent hotel transactions Talk of predatory interest in Home Retail Group, the former GUS retail business, resurfaced. Traders again speculated that CVC, the private equity firm, is contemplating an offer for the Argos owner. The shares rose 11¼p to 483p.

J Sainsbury put on 5p to 563p on expectations that Robert Tchenguiz, the property investor, is set to declare an increased stake in the supermarket group. He has already built a 5 per cent holding.

Anglo American rose 78p to £31.17 after it gave further details on the planned spin-off of Mondi, its paper and packaging business to focus on mining. The group said Mondi would list in early July in London and Johannesburg. Existing Anglo American shareholders will receive 25 shares in London-listed Mondi and 10 Johannesburg-listed shares in Mondi for every 100 Anglo shares they hold. The company will then consolidate its shares, with investors receiving 91 new Anglo shares for every 100 they own.

— New York: Data on job creation, manufacturing and inflation boosted confidence in the strength of the US economy. The Dow Jones industrial average closed at a record 13,668.10 points, up 40.50.

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