Britain's benchmark index ended higher on Monday as free-to-air broadcaster ITV rose on persistent bid speculation, while miners tracked weaker metal prices. The FTSE 100 was up 52.6 points, or 1 percent, at 5,541.8 but is down over 14 percent for the year to date.
ITV rose 6.3 percent as traders cited persistent market talk of a possible bid from TV producer Endemol. Endemol, which is partly owned by Italy's Mediaset, may consider a bid for UK television network ITV, Mediaset's vice-chairman, Piersilvio Berlusconi, told Il Sole 24 Ore newspaper on Sunday. ITV declined to comment, while Mediaset declined to comment beyond what was published in the newspaper.
Beaten-down housebuilders grabbed the spotlight after traders said Polaris Capital Management raised its stake in Barratt Developments, which jumped 23.6 percent. Barratt Developments said Polaris had reached a threshold of a 6 percent stake and declined to comment further. Aside from the rally in Barratt Developments, analysts also pointed to short-covering ahead of the usual summer lull, as well as hopes for the temporary suspension of stamp duty for first-time buyers.
"It's a combination of things," said Chris Millington, an analyst at Numis Securities. "People are closing their short positions before they go on holiday and Libor has suffered a little recently. Similarly oil prices are easing (from their peaks)," he added. Target price increases by Goldman Sachs across the housebuilding sector also lifted stocks and Taylor Wimpey gained 14.2 percent and Persimmon advanced 11 percent.
Bovis added 9.7 percent after Goldman Sachs removed the stock from its "conviction sell list". Wolseley tacked on 13.4 percent on persistent market rumours about the potential sale of its US unit. The release of UK producer price inflation data for July gave some support to the index, as manufacturers' costs unexpectedly fell at their sharpest pace in 1-1/2 years.
"The FTSE certainly bounded out of the starting blocks this morning but after the quick 40 point rally, further gains have been difficult to find," said Jimmy Yates, a dealer at CMC Markets. "That said, there has been something of a dearth of economic and corporate data released today to provide the market with any further direction." As precious metals prices fell, miners weighed on the UK's blue chip index.
Eurasian Natural Resources Corp fell 5.7 percent after copper producer Kazakhmys said it increased its stake in the group to a blocking majority of 25 percent but it had no intention to bid for now. Kazakhmys lost 1.1 percent. Xstrata fell 1.3 percent after the Sunday Telegraph said the miner was planning to raise more than 5 billion pounds to forge ahead with its $10 billion hostile take-over bid for South African platinum producer Lonmin.
The bidding price of 3,300 pence a share was however below the Lonmin share price, which was around 3,400 pence. Lonmin was down 0.6 percent. Oil shares buoyed the index however, despite US crude prices slipping later in the day to below $114 a barrel.
BP and Royal Dutch Shell added 1.1 and 1.9 percent respectively as fighting between Russia and Georgia disrupted some exports from the Caspian region. Retailers also climbed ahead of the release of the UK British Retail Consortium data for July due at 2301 GMT. Marks & Spencer, Carphone Warehouse and Next added 4.8 to 5.9 percent.