Bank Lloyds TSB and delivery firm Exel led Britain's FTSE 100 to its biggest rise since the first session of the year on Tuesday as take-over talk swirled around both firms, while telecoms group Cable & Wireless, insurer Aviva and several big US names added support by cheering investors with upbeat trading statements. Freight and logistics firm Exel moved into the take-over spotlight as dealers cited talk it could be a target for German rival Deutsche Post, or that US firms Fedex and UPS could be waiting in the wings.
Exel shares rose 4.8 percent - backed up by volume of over 9 million shares, more than three times its average volume - to lift its market value to over 2.3 billion pounds.
Talk also returned that Lloyds TSB will be the next bank in line for a take-over, with dealers saying the speculation was stoked by heavy turnover in February 2005 options in the UK bank's shares. Lloyds rose 3.1 percent as over 80 million shares changed hands, more than double its average volume.
Spain's BBVA was tipped as a possible predator, but again the talk was vague and several dealers said the start of the UK bank reporting season was a more fundamental reason for a rise across the sector. Northern Rock kicks off the results on Wednesday and dealers expect the industry to report strong profits.
The FTSE 100 index closed up 30.7 points, or 0.6 percent, at 4,843.2, as solid morning gains were extended to 4,850 in the afternoon. US shares jumped in early action after better-than-expected results from investment bank Merrill Lynch, healthcare firm Johnson & Johnson and others, plus positive consumer confidence data.
"What people have been waiting for is for corporates to come out with some pretty good numbers and reasonably positive outlooks, which we haven't really seen so far. Now we've had some better-than-expected corporate news and some better economic data giving investors something to get their teeth into," said Henk Potts, investment manager at Barclays Private Clients.
Cable & Wireless topped the FTSE leader-board with a 5.5 percent jump after its third quarter revenues and cash balances beat expectations. Dealers said the company still faces tough competition in the UK market, but the results were a relief and the prospect that C&W had restarted or would soon restart its share repurchase programme also lent support; C&W plans to buy back shares worth 250 million pounds by mid-2006, and has so far only spent 29 million pounds.
Elsewhere in the sector, mobile phone giant Vodafone added 0.9 percent and rival mmO2 firmed 1.2 percent as both are expected to deliver robust subscriber growth later this week. Analysts at ABN also raised their target on Vodafone to 165p after increasing their valuation of Vodafone's Spanish business, and lifted their target on mmO2 to 150p, citing the prospect of upgrades to earnings estimates.
Aviva was another bright spot, adding 3.1 percent after a rise in new business figures. Its upbeat outlook also spurred rivals Legal & General and Prudential to both rise about 2 percent.
But miners slipped lower to hand back some of their recent gains, while plumbing equipment supplier Wolseley shed 2 percent after Merrill Lynch lifted its earnings forecasts for the company but retained a "sell" stance, citing the prospect that US housing demand will come under pressure later this year.
Mid-caps also joined the take-over speculation, with money and futures broker Icap adding 4.4 percent after an approach for small-cap money and securities broker Trio Holdings raised the prospect that Icap could be a target if consolidation continues to pick up pace in the financial services industry, following a spate of recent deals.
Comments
Comments are closed.