SURGING gas prices, soaring domestic energy bills, legions of angry customers berating the company bosses - it hardly sounds like ideal conditions for a merger frenzy but that is exactly what is happening in the energy sector.

After confirmation last week that Germany's E.On is mooting an offer for Scottish Power, things are likely to get hotter in the next few days with speculation mounting that Centrica might mount a counter bid or be swallowed itself.

And Centrica won't be able to hide from uncomfortable questions as it must meet investors and analysts on Thursday for half-year results.

Last week it primed the City by admitting profits would be at the lower end of expectations.

Centrica has been hit by the rising cost of gas which it must try and pass on to the customer, but this will take time. All the more reason, say analysts, for Centrica, which is a net buyer of gas, to beef up its own production facilities to protect itself from further price rises. Talks with Norway's Norsk Hydro which could have led to a takeover of Centrica, petered out earlier this year, but the Norwegian group is not entirely out of the picture.

Another possible bidder is Gaz de France.

More bid action could see Scottish Southern Energy or RWE muscle in on E.On's anticipated Pounds 11 billion bid for Scottish Power.

Takeover hopes are also continuing to support copper miner Antofagasta, which announces first-half profits tomorrow.

Bid rumours have swirled around the Chilean company ever since its founding father and major stakeholder Andronico Luksic died last month.

His family now control his 65% stake and rival miners, including Xstrata, Rio Tinto, BHP Billiton and Anglo American are almost certainly circling.

Analysts are expecting a hefty increase in half-year profits on the back of record copper prices.

Williams de Broe has pencilled in net profits of $332.6 million against $221.3 million last time.

With the shares touching new highs just shy of 1500p, the major risk lies in a future sharp correction in copper prices.

Look out for some action at GlaxoSmithKline-this afternoon when critically important data on rival drugmaker's Eli Lilly's obesity treatment for type II diabetes is revealed for the first time.

The anticipated positive results of the PROactive trial, due to be presented to the European Association for the Study of Diabetics, will reflect well on forecasts for Glaxo's Avandia products. Morgan Stanley has hinted it may upgrade Glaxo if today's findings are particularly favourable. Uncertainty about the PROactive trial was a major reason analyst Andrew Baum decided not to upgrade Glaxo to overweight last month.

Housebuilder Redrow took the initiative on affordable housing with its Pounds 55,000 debut homes in Rugby, Warwickshire. The budget homes may have been a soaraway success as far as first-time buyers are concerned but investors are not convinced that a profitable future lies in this market.

They will question new chief executive Neil Fitzsimmons about future strategy and house market sentiment when he unveils half- year figures tomorrow.

Share prices made a strong start to the week in the Far East. In Tokyo, the Nikkei 225 Average closed up 204.39 points at 12,896.43 while in Hong Kong the Hang Seng index was ahead 54.61 at 15,220.38.