Diageo little moved on Foster's bid talk

Diageo shares recovered from an early loss today, as analysts played down talk that the company might be planning a £4 billion sterling bid for Australian wine and beer maker Foster's.

British newspapers including the

Times

said there was talk that Diageo was mulling a bid for Foster's, possibly in conjunction with Scottish & Newcastle, which owns European rights to Foster's lager.

Analysts said Foster's could be attractive to Diageo, but said S&N's European rights may make the lager operations less appealing on an international basis.

"Putting another international beer brand alongside Guinness would be interesting for Diageo, but the basic problem is that S&N has got the rights to Europe," said one analyst.