Three of the FTSE 100’s dogs wagged their tails yesterday ahead of the decision on US interest rates.

DSG International, the former Dixons, was the top performer, up 8.6p to 129.5p on talk that Best Buy, the American electricals retailer, may be pondering a bid. Analysts played down the gossip, although the temporary absence of a chief executive makes the retailer vulnerable. One analyst said: “Why would they want to waste money on a company whose business is deteriorating?” Best Buy is keen to get into China and India, not the UK high street, which is set for a tough ride.

Mitchells & Butlers was the next best gainer, up 40½p to 665½p, as the Irish tycoons J. P. McManus and John Magnier – or their vehicle Elpida – emerged on the shareholder register with a 3.4 per cent stake. The Irish pair acted as kingmakers in the takeover of Manchester United by building a blocking stake but in this case traders believe they have just spotted some value. The pair know Robert Tchenguiz, who holds 19 per cent, and analysts believe the shares have fallen too far and should gain once the credit markets allow M&B to complete its delayed property deal with Mr Tchenguiz.

Taylor Woodrow, the housebuilder, bounced back from recent lows, up 14p to 247½p on results that were not quite as bad as expected.

The FTSE 100 closed up 62.6 points at 6,721.6 on a soaring oil price and as hedge funds closed short positions ahead of the Fed’s rate decision.

Unilever was the worst blue-chip performer, down 27p to £16.25 ahead of results today. Andrew Wood, an analyst at Sanford Bernstein, said he expected a slowdown in sales, margins and earnings per share growth.

Premier Oil’s 72p rise to £12.40 made it one of the top mid-cap performers on talk that Italy’s oil giant Eni, Australia’s Santos, or Shell were looking to bid. Fellow target Burren Energy, where Eni has declared an interest, gained 35p to £12.10, well above the £11 the company has said indicative offers have reached, and Cairn Energy– also rumoured to be sought for its Indian oil fields – gained 74p to £23.53. BP, one of the rumoured Cairn predators, was up 2½p at 625p.

Sports Direct International bounced back 8¾p to 144¼p as traders said Mike Ashley may be in a “win-win” situation having increased his stake in Umbro, down 2¾p at 190¾p, to just under 30 per cent. He either succeeds in securing his supply of football shirts or he extracts a higher bid from Nike and takes a profit.

Benfield Group, the reinsurance broker, was up 15p to 303¾p on continuing bid talk. It is said to have rebuffed a 313p bid from Goldman Sachs but there are reports that other buyout funds are eyeing the broker while Aon is rumoured to be interested. Deccan Value Advisors has built an 11.7 per cent stake in the past few weeks and is now the largest shareholder.

Ladbrokes eased 3½p to 411½p after UBS placed 16 million shares for an investor.

— New York: Wall Street looked for the positives as the Federal Reserve cut its benchmark interest rate to 4.5 per cent but raised concerns about inflation that stirred unease that further cuts might not be forthcoming. At the close the Dow Jones industrial average was up 137.50 to 13,930.00.

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