Leading UK shares closed higher for a fifth consecutive session on Monday, driven by solid gains in oil majors Shell and BP as crude prices rose, while fresh bid talk fuelled a 3 percent rise in broadcaster ITV. ITV shares closed at 128-1/2 pence, boosted by a report in the Mail on Sunday that US media firm Time Warner and investment bank Goldman Sachs had linked with British buyout firm Apax over a possible 165-pence-per-share bid for the broadcaster.
The FTSE 100 index ended 23.3 points higher at 5,184.3, another three-year closing high, with most of the upside coming from gains of 3.9 percent and 1.9 percent in BP and Shell as oil prices climbed again in Europe after last week's retreat.
BP, which has a FTSE market weighting of over 10 percent, was also in demand ahead of a trading statement due on Tuesday.
Volume was a slender 1.7 billion shares, with US investors absent for the US Independence Day holiday.
Hilary Cook, Director of Investment Strategy at Barclays Private Clients, said that although BPC liked UK equities it would not be chasing the market at current three-year highs, while further fuel for the powerful rally since May could be scarce.
"We don't think the UK market is particularly good value. It has been a big beneficiary of the strength of the oil price because Shell and BP are such big constituents of the index, but that can only go so far," said Cook.
Market observers said an improvement in the tone of US economic data releases, the most recent being positive consumer confidence figures on Friday, also helped keep investor sentiment buoyant, although the market could yet run out of steam.
"The market's great, but we need something more to keep it going, some good trading reports. Apart from BP tomorrow, we're going through quite a quiet time in terms of updates. It's very encouraging that FTSE's holding onto the gains but ... where the next little burst comes from remains to be seen," said a trader.
Mergers and acquisitions talk caught some market attention in the absence of US business, with Somerfield down 2 percent after weekend press reports said Icelandic investor Baugur might pull out of a consortium bidding for the food retailer.
Baugur said it had not offered to withdraw from the consortium, while sources close to the matter said a bid was not likely to come before the end of this month.
Elsewhere on the downside, shares in the London Stock Exchange itself fell 0.7 percent, dented by concern that a possible bid from suitor Euronext could be derailed by tough conditions imposed by the UK competition authority. BHP Billiton was top-gaining miner, rising 2.1 percent, helped by a target price upgrade from Smith Barney.
The biggest mid-cap failure was Travis Perkins, whose shares slid 7.8 percent after the building materials firm cut profit expectations as slower consumer spending and a slow housing market hit sales at its trade and retail arms.
"The momentum which has driven Travis Perkins' growth is now at risk, as both Travis Perkins builders' merchanting business and Wickes are exposed to slower activity in the housing market," said analysts at stock broker Charles Stanley.
The disappointment spread to shares in home improvements company Kingfisher, off 1.6 percent.
In contrast shares in Britannic surged about a fifth in value as they resumed trading from the level they were suspended at last month after the insurer agreed a 1.8 billion-pound merger with Resolution Life.
Comments
Comments are closed.