Hopes that Zurich Financial Services could be taken over flared up again, with dealers this time suggesting that hedge fund giant Man Group has the company in its sights.

Although some investors were unsure whether Man would look to make such a major acquisition at a time when it is busy spinning off one of its divisions, Zurich's shares have been strong in recent trading.

For some time, dealers have speculated that Zurich could be snapped up.

In recent months the Swiss company has been associated with American business St Paul Travelers Company and insurance giant AIG.

Friends Provident, trading at 193p, was also a focal point as rumours circulated that a major shareholder was selling a significant stake. On Tuesday, volumes in the life assurer were extremely heavy, with more than three times the usual number of shares changing hands.

Meanwhile, KBC Peel Hunt published a bullish note on Lloyd's insurer Hardy Underwriting. Analyst Charles Coyne said the shares should move further ahead, and gave the stock a target price of 325p. He added that Hardy was entering "a new era of growing the business substantially to take advantage of excellent opportunities" and that the early indications were that the new non-marine teams "are enjoying a lot of support from intermediaries". As Insurance Times went to press, Hardy was trading at 283p. IT

Yvette Essen is stock market reporter for The Daily Telegraph