Talk that Persimmon is preparing a bid for Bovis made the latter the only major housebuilder whose shares ended the day higher, up 7¼p to 463p on twice the usual volume.

Persimmon’s chief, Mike Farley, said at the company’s annual meeting last month that there would be opportunities for acquisitions later in the year as housebuilders’ valuations fell.

Bovis’s £550 million market value is thought to be less than the current value of its land bank. It would give Persimmon access to plots for homes priced around £200,000 in the South East, where it is expected that demand would recover when the mortgage drought ends since there is a shortage of family homes.

Persimmon was down 13p to 541½p in line with the sector while Taylor Wimpey fell 16¾p to 104¾p as it went ex dividend and investors could see no other reason to hold the shares.

The FTSE 100 ended up just 6.5 at 6,198.1 after a 65-point rally in the morning ran out of steam as oil rose past $132 a barrel, raising worries over inflation.

Oil costs drove British Airways down 5p to 202¾p and Morgan Stanley said that a defensive merger with either Iberia or Lufthansa would make sense. Iberia’s key Spanish shareholder has been hinting that he would sell at the right price.

Admiral, the insurer that owns the Confused.com price comparison site, lost 18½p to 853p after a ComScore survey showed that viewers dropped year on year in April. JPMorgan said that it was losing market share to rivals such as Moneysupermarket, up 1½p to 121½p. The latter is experiencing 50 per cent growth in its insurance site, said Credit Suisse, which put an “outperform rating” on the stock.

BG was the blue chips’ top gainer, up 72p to £13.94 on the record oil price and Shell was up 100p at £22.12, just 6p shy of its record 2001 high. It was also helped by talk that it was close to settling a long dispute with Nigeria’s Government over financing oilfields there. Cairn Energy rose 162p to £36.81, Tullow Oil was up 35½p to 969p and BP rose 21¾p to 649¾p.

Mining shares rebounded from Wednesday’s sell-off. Vedanta Resources rose 70p to £27.11, buoyed by UBS raising its target price from £26 to £31.

However, investors were plainly not prepared to take long-term bets in other sectors, as stocks plunged after going ex dividend. Home Retail Group, the Argos owner, lost 16¼p to 232¾p, J Sainsbury fell by 15½p to 340p, Carnival lost 82p to £18.53 and Unilever shed 48p to £16.35.

Yell dropped another 23¼p to 130¼p as UBS said that the group might cut next year’s dividend completely. Yell has stoked fears that it will need a rights issue by not revealing the level at which it will breach bank covenants. Alex DeGroote, of Panmure Gordon, said: “Yesterday’s results meeting was deeply unsatisfactory. In particular, we cannot understand why a rights issue has been ruled out.”

Genus shares rose 1½p to 860p, on continuing takeover rumours. Recent director share sales came as bonuses vested, and so do not exclude the possibility of bid talks taking place. New York: Shares on Wall Street tumbled for a second successive session because of record-high oil prices. The Dow Jones industrial average closed at 12,601.20, down 227.50.

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