Struggling British Airways flew 14p higher to 367.5p on upbeat news from German rival Lufthansa, while cigarette maker Imperial Tobacco puffed 22p higher to 722.5p on vague bid talk.Vodafone rang up a 6.5p gain to 283.5p. Peers Aggregate Industries, 1.5p better at 71p, and Pilkington, up 1.5p to 88p, were also helped by bid talk.Information group Reuters beamed 37.5p higher to 677.5p on talk of a big Internet deal and good performance by subsidiary Tibco on the US market. Volume, at 2.3 billion, was one of the highest recorded, boosted by pre-Christmas programme trades and huge turnover in Vodafone AirTouch. The undercard outperformed once again, with the midcap ending 33.1 better at 6,077.5 and the Small Cap rising 1.7 to 2,842.2Cement-maker Blue Circle rose 17p to 315.25p on returning whispers of a strike from UK rival Hanson, up 14p to 483p, or France's Lafarge. The story was bolstered by talk that the same investors who bought Tarmac, 2.5p better at 559p, ahead of its takeover by Anglo American, 100p higher to 3611p, were piling into Blue Circle.

The FTSE 100 finished 4.9 lower to 6,550.8, dragged down by profit taking and a couple of heavyweight casualties. Not even an opening rally in the Dow, where computer giant Hewlett-Packard posted stellar earnings, excited the bulls. The stock fell 6.25p to 91.75p despite talk that something is afoot. Industry gossip suggests that the Spanish hotels group Sol Melia is having a close look, with a view to buying the Thomson family's 19 per cent stake or even to engineer a merger.The rest of the market did not have the stomach to fight for a place in the sun. As a result, the Lloyds bid would only be a spoiler of BoS and RBS offers and would achieve very little apart from upsetting the Scottish rivals' applecarts.Other dealers dismissed the Lloyds/NatWest rumour and suggested that the bank is looking at some of its smaller rivals, such as the Woolwich, up 1.25p to 372.5p, or Abbey National, down 4p to 1,084p.The day's other intriguing story involved holiday group Thomson Travel. Experts believe that the competition authorities would not allow Lloyds to buy NatWest because of the dominant position the two giants would have on the country's high streets. Followers of the stock fear that the lender would spend time and money on a bid which has little chance of succeeding.

The Lloyds fire-sale appeared to have been triggered by rumours that the cash-rich bank is considering a costly acquisition. A bunch of super- bears peddled the wild story that Lloyds is considering entering the battle for NatWest, unchanged at 1,387p. With original bidder Bank of Scotland down 7p to 741.5p, believed to be plotting an increased offer, and mooted counterbidder Royal Bank of Scotland, 2p higher to 1,285p, sitting tight, a Lloyds intervention could throw the race wide open. However, the market is not keen on a Lloyds intervention. The bank dropped nearly 4.5 per cent, or 39.5p to 855p, as a number of big sellers got rid of large lines of stock.