Tobacco companies lead FTSE
The London market was on the rise today after takeover interest in cigarette giant Gallaher lit up the tobacco sector.
Shares in Gallaher were up nearly 22% after it said last night that it was the subject of bid interest while Imperial Tobacco cheered 10%.
With the Bank of England leaving interest rates on hold at 5%, as widely expected, the FTSE 100 Index recorded its fourth consecutive session of gains to close up 41.2 points at 6131.5.
Paul Webb, trader at CMC Markets, said: “After a dubious start, it’s been a solid run of gains for the London index, breaking back above the 6100 level fuelled largely as a result of merger and acquisition speculation in the tobacco sector and a degree of relief that the Bank of England did indeed leave interest rates unchanged at this week’s meeting.”
Gallaher, which makes Benson & Hedges and Silk Cut, was up 211p to 1190p as reports linked the approach from Japan Tobacco, the world’s third-biggest tobacco company and a former state-owned monopoly.
The interest in Gallaher shares spread to rival firms Imperial Tobacco and British American Tobacco as investors eyed the prospect of further consolidation in the sector. Imperial gained 192p to 2079p and BAT was up 32p to 1455p.
The cigarette firms were joined on the Footsie leaderboard by Barclays, up 20.5p to 707p, as traders speculated that it could be a target for BBVA or Bank of America.
Rival banks were also on the move with Royal Bank of Scotland up 38p to 1954p, HBOS 13p higher at 1061p, and Lloyds TSB up 7p to 550.5p.
But Bradford & Bingley lost 3.25p to 474.75p after a decline in margins overshadowed forecasts that full-year profits will meet expectations.
Severn Trent was also on the slide after it suffered knock to half-year profits as it counted the cost of tackling leaking pipes and refunding inflated bills. Shares were down 29p to 1450p.
In the second tier, North Sea explorer Premier Oil fell more than 10% or 141p to 1205p after it said it ended takeover talks with an unnamed suitor, thought to be Dubai Energy.
Leisure group Rank floundered after announcing the $965m (€726.2m) sale of its Hard Rock Café chain to a Native American tribe. Shares slipped 4% or 11p to 255.5p amid disappointment over the sale price, which was coupled with a downbeat trading statement.
Going in the other direction was under-pressure Woolworths, which gained 15% or 5p to 37.5p as investors bought back into the stock following its recent profits warning. Wooworths is seen as a possible takeover target for Baugur.
First Choice Holidays was up more than 5% after it emerged from a difficult year to report a boost in profits. Shares were 14p higher at 278p after it said increased long-haul bookings had helped offset a slow summer in Europe.
The day’s biggest blue chip risers were Gallaher up 211p to 1190p, Imperial Tobacco 192p higher at 2079p, Prudential 28p better off at 680p, and Wolseley up 38p to 1246p.
The heaviest fallers were Severn Trent down 29p to 1450p, Next off 31p to 1750p, Tesco 6.5p lower at 384.5p and Carnival down 41p to 2434p.
