LONDON (Dow Jones) - Bid speculation resurfaced in London on Wednesday, after a report emerged that construction and infrastructure group Amec has received a takeover approach from a European rival, sending the company's shares higher in early trade.

The report, which appeared in the Guardian Newspaper, said that the bid would value Amec at more than 1.2 billion pounds ( $2.07 billion ).

The board is expected to meet today to discuss the bid from a continental European rival, the report said. Amec shares were last up 4.2% in London .

David Buik at Cantor Index suggested that a company such as Spain's Acciona could be interested in buying AMEC.

Acciona shares were recently down 0.3% in Madrid .

The bid speculation comes one day after a cross-European tie-up failed in the utility sector, as German utility E.ON (EON) pulled out of bidding for Britain's Scottish Power (SPI).

Broadly, the FTSE 100 index steadied at 5,518 after hitting four and a half year highs on Tuesday. Oil companies added pressure to indexes, with both BP ( BP) and Royal Dutch Shell (RDSA) lower as oil prices drifted lower ahead of the long Thanksgiving weekend. European markets were higher.

Moving away from M & A, electrical retailer DSG International added 2.3% after it said that comparable sales for the 28 weeks to Nov. 12 declined 3%, or rose by 4% in total, as electrical comparable sales rose 1%, computing sales dropped 7% and communications sales declined 28%.

"There may be a bit of a relief today that the situation has not got worse...for now, though, the shares are being propped up by its dividend yield, a strong balance sheet and a degree of bid speculation," noted analysts at Numis Securities.

In earnings news, Anglo Irish Bank gained 2.5% after it said that fiscal 2005 pretax profit rose 36% to 685.2 million euros, while net interest income rose 38% to 720 million euros , after record net loan growth of 9.8 billion euros brought customer loans to 34.4 billion euros , up 40% from last year.

Engineering group Tomkins was another riser, up 4.3%, after it said that third-quarter comparable pre-tax profit edged up to 75 million pounds, or 5.69 pence a share, from 73.6 million pounds, or 6.08 pence a share, a year ago. Revenue rose 11.4% to 819.4 million pounds, after good contributions from recent acquisitions.

The company also said it expects the year as a whole to remain in line with market expectations.

Also, homebuilder Crest Nicholson added 1% after it said that trading for 2005 has been in line with its expectations, with open market housing completions up 3% and the average selling price up 5% to around 220,000 pounds.

On the earnings downside, specialty chemicals company Johnson Matthey declined 1.9% after it said that first-half pre-tax profit rose 20% at 106.4 million pounds, while revenue declined 7% at 2.28 billion pounds, reflecting lower precious metal trading volumes.

The outlook for the second half is for increased top-line growth, the company said.

"The shares have performed well into the figures and there is limited scope for revision to CSFB estimates. As such, and with the share price now slightly above our target price of 1,250 pence, we have downgraded from outperform to neutral," analysts at Credit Suisse First Boston said.

(END) Dow Jones Newswires

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