The London market enjoyed its strongest session of the year today as the FTSE 100 Index rose to its highest closing level since the summer of 2001.
Gas explorer BG Group set the pace with a 9% share price rise, while speculation of a banking takeover and a sharp recovery for mining stocks ensured the top flight index broke back over the 5800 barrier.
By the close, the Footsie stood 83.6 points higher at 5808.7.
The gain of 59p to 676.5p for BG came after the exploration company raised production targets and lifted its earnings growth outlook for the second successive year. Results were ahead of expectations and accompanied by a 57% improvement in the full-year dividend to 6p a share.
There was also a further gain of 4% for airports operator BAA, even though it announced a lacklustre set of traffic figures. Analysts were instead focused on yesterday’s takeover developments, as shares rose 27p to 779.5p – building on the 15% jump seen on Wednesday night after news of interest from Ferrovial.
Banking stocks were in favour again as speculation over a foreign bid for Lloyds TSB refused to die down. With a number of foreign banks thought to be waiting in the wings, shares lifted 16p to 549p, while Royal Bank of Scotland gained 42p to 1788p amid market rumours of interest from Citigroup.
Miners dominated the Footsie risers board as stocks put back most of the losses seen in earlier sessions. Xstrata rose 66p to 1634p and Anglo American gained 73p to 2085p.
In a busy session for corporate results, good news came from Unilever, although positive figures from Rolls-Royce and telecoms giant BT failed to translate into share price rises.
Unilever lifted 2%, or 10.5p to 609.5p, after announcing “solid” full-year results and adding that it planned to sell most of its frozen foods operation in Europe.
But BT lost early gains to fall 3.5p to 209p, despite third quarter earnings of £1.4 billion beating market hopes.
Shares in engine maker Rolls-Royce were also on the slide – down 12p to 431.5p - but traders blamed profit taking after a lengthy strong run as opposed to disappointment over profits, which jumped 49% in 2005.
ICI fared even worse with its shares falling 4% or 14.75p to 339.25p after its fourth quarter results were weaker than expected.
It was followed by Tesco, whose shares slipped 6.5p to 320.5p, as it surprised investors by announcing a move into the United States convenience foods market. One analyst said that while the project appeared well-thought out it represented a major challenge for the UK’s biggest grocer.
The biggest Footsie risers were BG Group up 57.5p at 675p, Xstrata ahead 66p at 1634p, Cable & Wireless up 3.75p at 106.5p and Anglo American ahead 73p at 2085p.
The biggest fallers were ICI down 14.75p at 339.25p, Rolls-Royce off 12p at 431.5p, Smiths Group down 22p at 922p and United Utilities off 16p at 684p.