Retail stocks jump on foot of takeover speculation

Shares in retail stocks jumped ahead today as investors reacted to speculation over possible takeover interest in B&Q owner Kingfisher.

Kingfisher shares rose 5% or 7.8p to 154.1p, while Marks & Spencer, Next and Argos owner Home Retail Group occupied the next three positions on the FTSE 100 Index risers board.

Oil prices holding firm near record levels of 125 US dollars a barrel also benefited the Footsie, with progress from BP and BG Group leaving the top flight index 33.8 points higher at 6238.5 by mid-morning. BP was 10p higher at 623p, while BG Group added 26p to 1367p.

British Gas parent Centrica, meanwhile, advanced 7p to 294.5p despite a warning that overall operating profits for the first half of this year would be “materially lower” compared with a year ago, mainly due to poorer performance in its British Gas Residential arm.

Analysts said the trading update gave a clear signal that Centrica intended to recover some of its margin pressure through higher domestic tariffs.

With prospector Tullow Oil cheering 16.5p to 923.5p, the exception to the rule in the power sector was nuclear firm British Energy, one of the Footsie’s leading fallers. BE fell 7p to 694p on reports that the under-offer business was unlikely to be sold to a single bidder.

In the banking sector, HSBC fared well after its first quarter trading update pleased investors, particularly lower-than-expected bad debt charges in the US.

Shares rose 17p to 883p, but a mark-down for Barclays from broker Citi put the bank among the fallers, off 9.5p at 442p. Barclays is due to issue a trading update later in the week.

Among the retailers buoyed by the Kingfisher talk, Next rose 48p to 1338p, Marks & Spencer added 14.25p to 413p and Home Retail lifted 8.75p to 274.25p.

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