FTSE rallies to a close
Signs of a revival in merger and acquisition activity helped the FTSE 100 Index power above the 6600 barrier today.
A joint venture between SABMiller and Molson Coors and a potential £1.5 billion bidding war for oil exploration company Burren were taken positively as the Footsie climbed more than 1%, or 74.5 points to 6615.4.
Traders have been starved of deal activity in recent weeks after US sub-prime mortgage defaults led to a crisis in lending confidence.
One of the casualties of the squeeze, Northern Rock, jumped 20% after fresh Treasury guarantees over the deposits of savers opening accounts since the crisis erupted. The move provides the lender with more time to sort out its future, lessening the prospect of a sale at a cut-price level.
Northern’s shares gained 34.25p to 206.75p as it also benefited from reports that US-based Lone Star was considering a move for the group.
Other financial stocks also enjoyed progress with Alliance & Leicester climbing 13p to 786p and Asian-facing bank Standard Chartered up 54p to 1694p, although ABN Amro bid victor Royal Bank of Scotland was down 2.5p at 558p amid continued concerns over the deal.
Chancellor Alistair Darling’s pre-budget report did little to upset the positive mood of the market, with the Footsie ending with a flourish despite the Treasury’s forecast of lower-than-expected growth next year.
Brewer SABMiller meanwhile gained 21p to 1487p after confirming plans to combine its US and Puerto Rico businesses with rival Molson Coors. The merger is eventually expected to generate around 500 million US dollars (£250m) a year in annual savings.
Broker upgrades and takeover activity also meant a busy session for the oil and gas sector.
Positive sentiment helped oil major BP make gains as most brokers predict a recovery in 2008 despite a poor operational performance in the current year. This helped the shares up 11p to 580.5p.
Sector peer Royal Dutch Shell was 2%, or 39p higher, to 1977p, while BG Group rose 24.5p to 851p.
News that FTSE 250 oil and gas explorer Burren Energy had rejected potential offers worth more than £1.5 billion meanwhile sent the stock soaring nearly 28% or 258p to 1180p.
Other mid-cap explorers buoyed by consolidation hopes included Premier Oil, up 85p to 1120p, and Dana Petroleum, ahead 66p to 1187p. In the top flight, Tullow Oil jumped 15p to 601p.
But building and plumbing materials firm Wolseley neared the top of the Footsie fallers, down 2%, or 18.5p, to 855p on trader talk that Citi had begun offloading some of its holding.
Housebuilders Barratt Developments and Persimmon were also among the top-tier losers following pessimistic comments on the outlook for the UK housing market from UBS. The firms fell 15.5p and 25p to 740p and 1015p respectively.
In the second tier, a positive trading update from Greggs boosted the bakery chain up 260p to 4910p, while news of a potential offer for floor coverings specialist Carpetright helped the stock lift 5%, or 54p to 1215p.
The biggest Footsie risers were Northern Rock up 34.25p at 206.75p, British Land ahead 55p at 1147p, Hammerson up 51p at 1196p, British Energy ahead 21p at 575p.
The biggest fallers were Kazakhmys down 39p at 1463p, Persimmon off 25p at 1015p, Wolseley down 18.5p at 855p and Barratt Developments off 15.5p at 740p.
