Citigroup singled out Imperial Tobacco, up 13p to 1,403p, as its favourite and retained a “hold” stance onBAT, down 2p to 888p, and Gallaher.Elsewhere in the blue-chip index, Smith & Nephew shed 24p to 528.5p after ABN Amro cut back its rating on the medical devices group to “add” from “buy”. On Tuesday, dealing rooms were awash with talk of a merger of Imperial Tobacco and Spain’s Altadis. Also driving the sector higher yesterday was a bullish note from Citigroup. JT did, however, stop short of naming Gallaher as of potential interest to the group. Tobacco stocks have without doubt been a major talking point this week. Hence the UK-focused Gallaher would be a good fit for the group The rumours of a possible link-up first surfaced in October.

Back then, the Japanese company indicated that it was looking at a number of acquisitions overseas and hinted that it would like to increase its presence in the UK. The excitement sent the tobacco giant 16p higher to an all-time high of 762p as traders scrambled to get a piece of the action. According to gossip, Japan Tobacco, the world’s third biggest cigarette company, is about to pounce on the owner of the Benson & Hedges brand Sector analysts were certainly not dismissive of the idea. The Phytopharm deal demonstrates that Unilever is at least beginning to move in the right direction, but ultimately there is no happy outcome to its conundrum. Eat less, eat local are not obviously welcome developments for the global food corporation.jeremy.warner independent.co.uk.

Pfizer has already been there before Unilever but eventually decided its licensing deal with Phytopharm wasn’t worth the candle. Yet the vacuum in leadership has continued into the LSE’s latest incarnation as a quoted company owned by investors. The LSE’s failure to buy Liffe, London’s fast growing derivative exchange, was a key wrong turn for which there is no reasonable excuse. From start to finish, the negotiation was mishandled with the result that Sir Brian Williamson, Liffe’s chairman, instead sold to Euronext, the LSE’s rival.The decision to remain focused solely on equity trading, leaving settlement and clearing to others, was equally misjudged. Neither Deutsche B? nor Euronext has been as purist in its approach, which today means that both of them are larger businesses better placed to play the role of consolidators.

The LSE’s only hope of independence now rests in flogging this point to death with competition regulator, yet shareholders won’t thank its directors for so doing. I’ve been inundated over the past few days with e-mails complaining of exactly the same thing.I know it’s fashionable to argue that it doesn’t matter who owns the City’s businesses and institutions providing they continue to operate and thrive here, but plainly the LSE touches a raw nerve. Unilever will be hoping it proves more effective than Phytopharm’s supposed miracle cure for baldness, which turned out to be demonstrably worse at correcting the problem than E45 cream.The omens, on the other hand, are not that good. How wrong can you be?Slimfast’s sales duly slumped, and today it is Atkins, not Slimfast, which is everyone’s favourite way of shedding the pounds. Still, Unilever hasn’t entirely lost its appetite for appetite suppressants. Yesterday brought news of a £21m deal with the natural remedies company, Phytopharm, which owns the rights to products extracted from the Hoodia cactus, a South African plant used for centuries by Kalahari bushmen to reduce appetite out on hunting expeditions.