Britain's benchmark share index closed firmer on Monday, bolstered by a resurgence of bid talk for mobile phone company mmO2, although bank group Lloyds fell after it decided not to buy back shares.
MmO2 closed 0.7 percent higher after widespread talk that Dutch telecoms firm KPN would make another approach for the firm, a couple of weeks after KPN said it would not rule out a hostile bid after take-over talks fell through.
KPN said after the market close it was still not holding talks with mmO2, while an mmO2 spokesman said he was not aware of any bid. The shares closed below the day's high.
Traders said the renewed talk was enough to draw buyers into a market which had been downbeat after Friday's US jobs data raised doubts about the strength of the US economy.
"Bids are usually a pretty good sign that management of companies are more confident and it should feed through into investor confidence that these companies are seeing more stable or possible better times ahead," said Tim Rees, Director of Investment Strategy at Insight Investment.
The FTSE-100 index closed 6.7 points higher at 4,553.8, having been in negative territory for much of the session, helped during the afternoon by a bright start on Wall Street. Volume was a relatively light 2.2 billion shares.
Lloyds TSB, stood out with a 2.8 percent fall. Pre-tax profit at Britain's fifth-biggest bank beat forecasts with a 66 percent jump and the bank kept its dividend intact but traders reported disappointment that it decided not to buy back shares, retaining its cash for acquisitions.
Retailer GUS was the strongest FTSE performer, up 3.1 percent after investment bank Merrill Lynch upgraded its rating on it to "buy" from "neutral", citing recent under-performance by its shares despite strong earnings growth.
Chilean miner Antofagasta rose 0.2 percent on its first day in the blue-chip index, replacing food retailer Safeway.
Engineering firm Jarvis was the top mid-cap gainer, up 11 percent and extending last week's 25-percent surge on relief that two negative issues had been cleared.
Andrew Nussey, analyst at Altium Capital, said investors had been concerned that Jarvis would not receive an outstanding payment from Network Rail and that a BBC documentary last week would unearth bad news.
Oil and gas exploration firm Cairn, which recently surged after a successful test drill in India, gained 7.3 percent. The company is due to report annual results on Tuesday and some in the market anticipate a positive update on progress in India with the results.
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