Britain's leading shares rose on Tuesday, supported by gains in heavyweight oil stocks and in Hilton as investors bet on bid activity in the hotels sector, but shares in PartyGaming sank after an analyst downgrade. Shares in Hilton were the top blue-chip gainers, up 2.8 percent at 346-3/4p, on growing consolidation hopes, dealers said.
Broader strength in major drug makers such as GlaxoSmithKline and gains in the banking sector also helped the FTSE 100 index to shrug off a drop in one of its biggest constituents, Vodafone, which fell as investors baulked at its acquisition of Turkish mobile phone operator Telsim.
The FTSE 100 share index ended 5.7 points, or 0.1 percent, higher at 5,507.2 points, although down on an earlier high of 5,527.2.
Turnover was a little lighter than usual, with 2.4 billion shares changing hands, as some investors stayed on the sidelines ahead of an expected 13th straight quarter point increase in US interest rates later in the day.
BP and Royal Dutch Shell accounted for around 5 points of the FTSE 100's gain while BG Group featured among top gainers with a 2.2 percent rise.
Although the index has stalled a little in the last few weeks it has gained more than 14 percent since the start of the year, buoyed by mergers and acquisitions and share buybacks, with oil stocks and mining firms such as Rio Tinto among the strongest performers thanks to record oil and metals prices.
"Market participants appear pretty happy where they are. Nobody really wants to push it in either direction. We seem to have found a reasonable parity level to head into the end of the year with," said Neil Parker, a market strategist at Royal Bank of Scotland.
"The reason why it is a bit lacklustre at the moment is that there is no lead and the market needs a lead - mergers and acquisitions or even just somebody suggesting they are going to have a better or a worse year," he said.
Shares in Vodafone were among the blue-chip index's top fallers after the mobile phone giant said it expected its acquisition of Turkey's second biggest mobile phone operator, Telsim, to dilute adjusted earnings per share in the short to medium term.
"Telsim looks very, very expensive on any available metric. We expect the acquisition to be earnings-per-share dilutive for the next 5 years," said Christian Maher, a telecoms analyst at Investec.
Online gambling company PartyGaming shed 5.5 percent after Lehman Brothers cut its rating on the stock to "underweight" from "overweight" following a strong rally since October.
Pest control-to-security services firm Rentokil also fell, shedding 2.3 percent to 162-3/4 pence as dealers said Morgan Stanley was placing 14 million shares in the firm at 163-1/2p each.
Miners, which have rallied this year on the back of record gold, platinum and copper prices, also fell broadly after gold fell back sharply from Monday's near-25-year high.
But banks lent support to the market, with Standard Chartered 1.1 percent higher, after a recent raft of trading updates from the sector which were generally well-received by investors
Among mid-cap stocks shares in equipment-hire company Ashtead surged to a six-year high at 181-1/4 pence, before closing a shade lower at 180-1/2p after saying it had doubled its first-half profit and would resume dividend payments after three years.
Elsewhere FirstGroup advanced 3.8 percent after winning rail franchises for Greater Western and Thameslink.
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