GW Pharmaceuticals, the drugs from cannabis company that has consistently failed to bring its painkilling medicine to market, dived 29 per cent as it said that European Union regulators were making it begin trials again.

The shares fell 27p to 65p, a two-year low. GW said that it would withdraw its application for EU approval for Sativex, the spray-under-the-tongue cannabis extract, so that it could conduct further trials.

Regulators ruled that there was not enough evidence in its trials that Sativex had any benefit over a placebo and that they must be redone. GW aims to reapply within 12 months.

The Lloyd’s underwriting sector was set alight by an unexpected bid for Atrium Underwriting, up 47¾p to 358½p on a 365p-a-share takeover offer from the Bermuda-based reinsurer Ariel Re. Ariel has acceptances from 30 per cent of Atrium shareholders. Eammon Flanagan, the Shore Capital analyst, said that this could trigger the start of a raft of takeovers of quoted Lloyd’s underwriters. “The gloves are off,” he said.

The rival Kiln gained 6½p to 126½p, while Catlin Group climbed 8p to 505p and Chaucer Holding was up 6p at 106½p.

Uranium Resources, the AIM-listed uranium explorer, rose 22 per cent, or 1.37p, to 7.62p after it said that Western Metals, its joint venture partner in Tanzania, was evaluating new drilling results. Traders were betting that they had struck uranium.

I-design, which provides advertising on cash machines for Nationwide and HSBC, was welcomed to trading on AIM with a 3½p gain to 71½p.

Pallinghurst Resources, the company run by Brian Gilbertson, the former BHP Billiton, boss made a £350 million agreed cash offer for Consolidated Minerals. It trumped a rival cash-and-shares bid by Territory Resources, of Australia. Consolidated’s shares edged down 4p to 143½p towards the 141p offer price.

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