What's next on the menu?

By SAM FLEMING FOR MAILONLINE
Updated:

 

Mamma Mia, what an appetite these private equity funds have! As Cinven prepares to gobble up Pizza Express owner Gondola, traders are already on the lookout for another high-street takeaway.

Garfunkel's owner Restaurant Group was one of a number of catering and pubs groups that set record highs yesterday.

The shares added 246p, up 13½p or 5.8%, after Panmure Gordon analyst Douglas Jack predicted the firm's strategy of cornering captive markets, such as airports and leisure parks, could help deliver over 20% growth in the medium term.

But speculation that the likes of Cinven or Wagamama owner Lion Capital could snap up another restaurant player is also helping to keep valuations plump.

Despite the best efforts of Jamie Oliver, Britons are dining out like never before, making companies such as Restaurant Group, Whitbread (off 2p to 1288p), and pub firms such as Enterprise Inns (up 6½p to 1052p) tasty morsels for cash-rich funds.

One analyst said: 'There's a lot of consolidation going on. Restaurant Group is being associated with potential corporate activity, though it would be a shame to see that growth story taken away by a bid.'

In the betting sector, hedge funds are firmly in the driving seat after the US legal turmoil drove private investors to safer shores.

The latest shock was Friday's arrest of the two Austrian heads of bwin.com, formerly BetandWin, over alleged breaches of French gaming laws.

Despite signs that the online legal mire is extending to Europe, the big UK players bounced back yesterday as hedge funds covered their short positions. PartyGaming rose

6p to 106¾p, topping gains among the biggest 100 UK stocks. 888 Holdings climbed 7¼p to 149p.

Hopes that Senate majority leader Bill Frist will fail in his attempts to smuggle an antionline gambling bill into a piece of defence legislation also pushed shares higher.

The Footsie 100 climbed 13.2 points to

5690.2, recouping some of its recent losses.

Resource stocks were the toast of the town, boosted by a vintage story about Royal Dutch Shell buying BG Group, up 10p to 650p. Both firms declined to comment on market chatter about a bid of up to 750p by Shell, 12p higher at 1740p. Premier Oil, another alleged object of Shell's affections, advanced 29p to 1037p.

South American mine workers are becoming more and more restive, which is good news for metals prices.

The cost of copper bounced, helping propel the likes of Anglo American, Xstrata and BHP Billiton to the head of the Footsie 100 leaderboard.

Strikes at big mines in Peru and Chile over wages fuelled fears of supply disruptions and helped copper snap three days of declines.

Kazakhmys advanced 59p to 1266p on optimism it will deliver a gleaming set of earnings today, boosted by its proximity to China and its easy access to rich mineral pickings in the happy hunting grounds of Kazakhstan.

On the bond markets hints from Chancellor Gordon Brown of higher rates sent investors in a spin, pushing yields to their highest since August 2004. A rare call by the Confederation of British Industry for a hike added to the gloom.

Banks such as Barclays (off 9p to 671p) and HBOS (15p lower to 1035p) took a hit as traders argued higher borrowing costs could hit the mortgage and credit card market.

Cadbury Schweppes lost some of its fizz after bottler PepsiAmericas spewed out a profit warning, pushings its shares sharply lower in the US. Cadbury, whose American brands include Dr Pepper and 7 Up, was 4½p flatter at 557½p.

Pearson shed 5p to 743p after the Financial Times publisher was downgraded by Lehman Brothers, which said its valuation was 'difficult to justify'.

Pure Wafer, which specialises in re-used silicone for the computer chip industry, added 13p to 246½p.

Chairman Giles Clarke, best known for founding Majestic Wine in 1981, splashed out £282,000 on 120,000 of the company's shares, at 235p each, bringing his holding to 1% of the stock.

The firm reported its first ever pretax profit of £2m and predicted 'another year of significant growth'.

• DESIGNER Vision, which supplies rear-seat car entertainment systems, slid ¼p to 6¼p, bringing its decline in the past month to 18%. The shares could be set to get a kick as the firm is believed to be on the cusp of announcing an order worth almost £3m for MP3 players from an unidentified retailer. Earlier this month the digital minnow announced its maiden operating profit of £294,000.

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