UK shares rise as bids lift Dairy Crest and Provident Financial

22 Feb, 2019

Britain's main stock index edged higher on Friday, led by gains in mining shares as optimism grew over global trade talks, while bid news drove Dairy Crest and Provident Financial among mid-sized stocks.

The FTSE 100 rose 0.2 percent by 0949 GMT but still looked set for losses on the week. The FTSE 250 index of mid-range stocks was up 0.3 percent.

Mining companies led the FTSE 100 gains, as falling inventories and optimism around the Sino-US trade talks pushed copper prices higher. Glencore and Fresnillo added about 2 percent each.

Dairy Crest surged nearly 13 percent, on track for its best day in more than four years, after Canada's Saputo agreed to buy it for about 975 million pounds ($1.3 billion).

Sub-prime lender Non-Standard Finance gained 4.2 percent after making a takeover offer for Provident Financial, which gained 5 percent despite the bid not offering a premium to its closing price on Thursday.

"This (NSF's offer) will come as a total surprise to the market ... It will take some time for the market to work through the potential merits of the offer," said Jefferies analysts, who noted PFG shareholders were being asked to accept a nil premium offer for better management.

Pearson gave up initial gains to trade down 1 percent after reporting earnings in line with forecasts and saying it expected sales to stabilise this year and grow thereafter.

Consumer good makers Unilever and Reckitt Benckiser dipped by nearly 1 percent after US food company Kraft Heinz posted a quarterly loss and highlighted the tough environment for the packaged food industry.

Among midcaps, Metro Bank rose 4 percent after gaining 120 million pounds in funding as part of Britain's Banking Competition Remedies scheme, which is intended to increase competition among banks.

CYBG shed 6 percent, biggest loser in the index, after it was turned down for funds under the scheme.

Investors are awaiting any signs of breakthrough in the US-China trade talks, while Britain and the European Union negotiate over a Brexit compromise that could pave the way for an agreeable divorce deal.

CMC Markets analyst Michael Hewson said that with a week to go until the March 1 trade deadline, an extension seemed to be the most likely outcome.

Copyright Reuters, 2019

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