Bid target old-faithful Friends Provident soared on revived vague rumours that continental rivals such as Axa may be pondering a takeover.

It was up more than 3 per cent in morning trading amid a FTSE that was very little changed, up 6 points at 6,646.9 by 11.00am.

But Friends is scheduled to report interim results on August 8 and the shares have had a rough ride of late, so there is speculation about of broker upgrades ahead of its figures.

GDP data showed that the economy was still growing fairly rapidly, confirming most expectations that the Bank of England will raise interest rates to 6 per cent in the coming months.

This counteracted any positive sentiment from Wall Street, where the Dow Jones industrial average closed up past the 14,000 barrier, at 14,000.4, last night for the first time.

Johnson Matthey gained 33p to £18.61 after Citigroup raised its target price to £20.00 and said that in a recent meeting with its chief it had been told that he was confident that the demand for the company's car and process catalysts would be sustained into the middle of next decade, longer than many expected.

Rio Tinto edged up as it told the Australian press that it would not be doing any more big deals after its $38 billion agreed bid for Alcan, of Canada.

The Australian press also reported that BHP Billiton had decided against making a bid for Alcoa but instead was considering the US copper miner Freeport McMoRan as a target.

BHP's shares at first gained but then came back as traders fretted about its potential new acquisition plan.

Cable & Wireless shares lost 2 per cent ahead of an annual meeting at which shareholders must vote on a controversial bonus schemes for the directors.

Among the mid-tier stocks Debenhams was off more than 4 per cent after shareholder Baugur was forced by the Takeover Panel to rule out making a bid for the department store giant.

Jon Asgeir Johannessen, the head of Baugur, implied to a newspaper yesterday that he had the cash to take over the chain.

He now cannot bid for six months unless someone else does.

The retail analyst Nick Bubb, of Pali Capital, said that downgrades for Debenhams were likely with next figures in early September.

He said that Next, WH Smith and DSG were better bets as bid targets.

WH Smith duly climbed more than 2 per cent to 426p.

In Asia the Nikkei closed up 41.4 points at 18,157.9 and the Hang Seng gained 275.7 points to 23,291.9.

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