Theories of Evolution

All eyes will be on Evolution Group this morning. Late yesterday, the fast-growing FTSE 250 stockbroker virtually cleared a stock overhang that had dogged its share price in recent weeks.

Half an hour before the market closed, a line of 9.7m shares, or 4.2% of the company, changed hands at 122.75p. City professionals believe the seller was Commerzbank.

The German bank's stake in Evolution is a legacy of its London-based "special situations" desk, which recently ceased trading. Commerzbank sold around half of its holding in April with Evolution emerging as the buyer, via its share buyback programme.

Traders believe Evolution, which has more than £100m in the bank, was the buyer again yesterday and estimate that Commerzbank's holding now stands at only 1%.

The purchase comes as Evolution, which has been caught up in the fall from the debacle at Regal Petroleum (down a further 3p to 67.5p yesterday) faces demotion from the FTSE 250 at tomorrow's reshuffle of the mid-cap index.

Its shares closed 0.75p lower at 125p last night.

In the wider market, leading shares were hit by a flurry of profit taking. The final scores showed the FTSE 100 down 19 points at 4,980.4 with packaging group Bunzl, down 11p at 536p, and steel maker Corus, 1.75p lighter at 43.25p, the two biggest fallers.

Both companies could be ejected from the Footsie at tomorrow's quarterly reshuffle, which confusingly will be based on today's closing share prices. In the case of Bunzl, dealers said its poor performance also owed something to the spin-off of its fibre division. Filtrona, which makes cigarette filters and felt-tip pens, closed at 232p on its first day of trading.

Meanwhile, the FTSE 250 fell 14.3 points to 7,190.5, dragged down by a poor performance from its housebuilding constituents. Taylor Woodrow shed 6p to 314.5p, while Westbury was marked 9.5p lower at 467.5p and Bellway slipped 16p to 848p, unsettled by reports that Gordon Brown is under pressure to amend the new finance bill, which has its second reading in the House of Commons today.

In its present form the bill would allow residential property to be held in the tax shelter of a personal pension plan from next April.

Elsewhere, the FTSE Small Cap index ended the session unchanged at 2,860.9. In the bond market, the 10-year gilt closed around 103.910, yielding 4.280%.

Aero-engine maker Rolls-Royce, up 4p to 284.5p, managed to buck the weak market trend after its joint broker, ABN Amro, issued a chunky "buy" note and increased its target price from 275p to 350p.

"The market has failed to recognise the major changes that have occurred at Rolls-Royce. An increase in demand for civil aero-engines and the after-market business will drive significant earnings growth over the next 20 to 30 years," the Dutch bank said.

Retail conglomerate GUS gained 7p to 856p, excited by news that a US consumer data company called Acxiom Corp had received a bid approach from its biggest shareholder. Acxiom competes with Experian, GUS's credit checking operation. Traders said the approach highlighted the value of Experian, which GUS plans to demerge.

On the downside, logistics group Exel eased 0.5p to 858.5p as the City had its first chance to react to comments made by the chief executive of rumoured predator Deutsche Post at the weekend.

Klaus Zumwinkel told the daily Tagesspiegel newspaper that he had no plans for a big acquisition despite recently seeking permission from shareholders to raise £3.2bn.

Lower down the market, Trafficmaster firmed 0.25p to 45p excited by weekend press reports that the government is about to outline plans for a national "pay-as-you drive" initiative. Bridgewell Securities says Trafficmaster is the only consumer satellite navigation company whose technology is capable of the two-way communication needed to make such a scheme work.

Biotech company ML Laboratories eased 0.25p to 18.5p despite continued talk that its broker, Code Securities, is working on a sizeable acquisition of a private company.

Stockbroker Walker, Cripps, Weddle, Beck held steady at 234p on rumours that today's results will be accompanied by news of a considerable dividend increase.

Elsewhere, Elementis improved 2p to 49p after news that the pigments and chromium group had allowed its biggest shareholder, the turnaround investment specialist Hanover Partners, to have two directors on the board

Readers may recall that Hanover did a similar thing at promotional products group 4imprint, whose shares have risen 60% in the past year.

On Aim, Crosby Capital, the mini-investment bank focused on the far east, rose 5p to 53p, lifted by the performance of a Japanese conglomerate called IB Daiwa. Earlier this year, Crosby obtained warrants to subscribe for 107m Daiwa shares at a price of only 30 yen each. On Monday, Daiwa shares hit ¥85.

GW Pharmaceuticals, the medicines from cannabis company, fell 1.5p to 119.5p, hit by rumours that it had lost an appeal that would have allowed the group to market its Sativex product in the UK without additional clinical trials. After the market closed, GW said it had not received any communication from the body considering the appeal.

US blow for Autonomy

The recent strong run of Autonomy, the former dotcom darling, appeared to have come to a halt yesterday after American investors who received stock just three days ago decided to sell.

Autonomy shares have risen 40% so far this year as sentiment regarding technology stocks has improved and the company, which makes software that helps track data such as emails and telephone conversations, has continued to deliver strong results.

But the shares fell 13p, or 5.5%, to 223.5p yesterday as it emerged shareholders of a US call centre software company had decided to sell at the first opportunity.

Late in April, Autonomy, headed by Mike Lynch, announced plans to buy eTalk for up to $93m (£51m) in cash and shares.

The deal was completed on Friday, with eTalk directors and shareholders finally receiving payment.

Over the weekend they appointed UBS, the Swiss bank that acts as Autonomy's broker, to find a home for their shares. UBS did this quickly, placing 8.6m shares late yesterday at 218p.