THE LONDON REPORT
BRITAIN’S top share index rose for a third straight session yesterday, buoyed by the return of M&A activity and supported by hawkish economic data and with heavyweight mining. Energy stocks lead the gainers.
The FTSE 100 closed 14.16 points higher, or 0.3 per cent, at 4,947.34, hitting a fresh highest closing level in 11 months.
The UK index is up 43 per cent since its year low in March. However, it remains 8.7 per cent shy of its level prior to the collapse of Wall Street firm Lehman Brothers a year ago, which jolted the financial markets worldwide.
“It’s been a session dominated by M&A activity yet again,” said Jimmy Yates, head of equities at CMC Markets, referring to Orange owner France Telecom’s plan to merge with Deutsche Telekom’s T-Mobile, plus continued speculation about potential suitors for Cadbury.
Confectionery group Cadbury rose 0.4 per cent amid hopes Kraft Foods might have to raise its offer by up to 40 per cent after shares in the world’s second biggest confectionary maker increased by almost half on Monday on news of the approach.
Cadbury rejected a $16.7bn bid from North America’s biggest food group Kraft on Monday.
Vodafone gained 1.7 per cent, with traders citing relief that it was not involved in expansion in the UK market, after Deutsche Telekom and France Telecom said they had launched exclusive talks to merge their UK mobile units.
Miners added the most points to the index, cashing in on a buoyant gold price. Gold surged through the $1,000 an ounce mark to its highest level since February, boosted by a weak dollar and with investors looking for a hedge against inflation.
Gold miner Randgold Resources gained 3.3 per cent, while Kazakhmys, Rio Tinto, Vedanta Resources and Lonmin rose 2.5 to 6.4 per cent.
And British manufacturing output rose at its fastest monthly rate in 1-1/2 years in July, with factory output rising 0.9 per cent, three times faster than analysts had expected, which helped push up sterling as well as supporting stocks.