Bid fever drove UK stocks higher on Monday as mobile phone operator O2, shipping company P&O and glass maker Pilkington all received approaches, sending their shares surging and driving the market to its best one-day gain in 2-1/2 years.
O2 was the top blue chip gainer, flying 25 percent higher on an agreed offer of 200 pence a share from Spain's Telefonica. The deal values the UK company at around 18 billion pounds ($32 billion) and comes after months of speculation of a possible move for O2.
The flood of take-over offers also sparked speculation in a number of other stocks, including fund firm Amvescap, home improvements retailer Kingfisher and construction group Hanson.
Catering company Compass Group was another company to attract bid talk after a weekend media report that Texas Pacific Group was working on a possible offer. Shares in all four of the rumoured targets rose over 5 percent.
By the close of play, the FTSE 100 was up 103.9 points, or 2 percent, at 5,317.3 points. The jump marked the index's biggest session gain in points terms since April 7, 2003, when hopes that the Iraq war would end quickly sent the market soaring.
"What it tells you, though, is that the corporate sector thinks the market is pretty attractive at the moment," said Andrew Bell, a strategist at brokerage Carr Sheppards Crosthwaite.
"Even without that vote of confidence, 12-1/2 or 13 times 2006 earnings estimates doesn't look like a level from which you're going to lose a lot of money unless something really bad happened economically or politically."
But the FTSE still was down 160 points on the month and well below four-year highs of 5,515 points at the start of October after concerns about rising US interest rates, inflation and the effect of higher commodity prices on company earnings all have hit investor sentiment.
O2 was the biggest bid of the day, and news of the approach boosted telecoms stocks across the board as investors reassessed the value of others in the sector. Mobile giant Vodafone and midcap Virgin Mobile jumped over 3 percent each.
Several other companies also stepped into the take-over spotlight, including shipping and ports firm P&O. Its shares rushed up 30 percent on hopes that an approach from Gulf state-owned Dubai Ports World would spark a bidding war.
Pilkington was next in line with a 21 percent rise after its long-term shareholder Nippon Sheet Glass said it was eyeing the glass maker. A source said the Japanese firm would offer about 150 pence a share for Pilkington, roughly in line with where the shares closed.
Building company Mowlem joined the M&A action late in the session, saying it too had received a preliminary approach that could lead to an offer for the group. Its shares rose 15 percent.
Medical device maker Smith & Nephew was one of the session's few fallers, off 1.1 percent as J.P. Morgan cut its earnings estimates for the company and also following strong gains last week.
Food firm RHM was the main mid-cap decliner, down 2.4 percent, after a downgrade to "reduce" from Dutch bank ABN Amro.