PARTYGAMING shares rocketed 26% today after the online gambling company said it was to merge with Austria's Bwin in a $3.3 billion (Pounds 2.1 billion) deal. The move will create the world's biggest listed internet gaming business, and save an estimated EUR 55 million (Pounds 46 million) a year.

Investors who own more than a quarter of PartyGaming's shares have already given the deal their full support, including some directors. Shareholders will meet in the first quarter of next year to vote on the deal.

The companies had held protracted talks about a potential merger but some investors fretted that the two were struggling to reach an agreement. Their relief that a deal had been reached sent the shares up 67p to 324p. Bwin's shares climbed 7.2% in Vienna before being suspended.

The enlarged group will be owned 48.4% by PartyGaming shareholders and 51.6% by Bwin investors. PartyGaming boss Jim Ryan and Bwin's Norbert Teufelberger will be co-chief executives of the merged company.

Shares in London were on the rise as a bevy of positive trading updates fed optimism among investors. The FTSE 100 gained 34.41 points to 5354.09.

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PartyGaming wasn't the only gambling group attracting interest. Playtech shot up 34 3/4p to 444 1/2p amid vague speculation that William Hill, off 0.2p at 169.1p, might be taking a look. The gambling software group already has a joint venture with the bookie. "Because they are strategic partners, it could make sense," said one trader. "It's one of those, like you get in the pharmaceutical sector, where it might be more cost effective for William Hill just to take over Playtech. Then again, it might just be talk because it's so quiet today."

On the mid-tier, Rank Group climbed 7.3p to 116.5p as it proved bingo is making a comeback. The casino and bingo hall operator said there had been a growth in visits to Mecca Bingo for the first time in a decade. Chief executive Ian Burke said: "We believe we can modernise the bingo business."

Rank made a profit in the six months to June of Pounds 25.1 million, a little up on last year. The numbers prompted City analysts to issue buy notes. Overall customer numbers increased by 11.9% to more than 2.5 million. Rank said it would pay an interim dividend of 0.74p a share, having not paid one this time last year.

Elsewhere on the mid-tier, Connaught jumped 4.2p to 35.9p after the crisis-hit social housing services provider won a reprieve. Connaught has agreed a short-term overdraft facility and a deferral of loan payments with its lenders. On Monday, Connaught said it was short of cash and was set to breach the terms of its bank loans.

soccer jerseys Are takeovers on the horizon in the water sector? Traders have long been talking up the likelihood of deals and today UBS made the case again.

But it wasn't the usual candidate -- Northumbrian Water -- that the City big-hitter reckoned was the best to snap up, but United Utilities. Analyst Ajay Patel said: "For investors looking for some gearing into [the] UK water M&A theme we see better value in United Utilities [than Northumbrian]."

UBS has kept a hold rating on Northumbrian but raised its price target for from 280p to 320p, which includes a "10% premium for potential M&A". HSBC was also a fan of United, 1 1/2p stronger at 563 1/2p.

But the bank's analysts were less impressed by the rest of the industry, downgrading Northumbrian and Pennon from buy to hold Replica Watches
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