Media and telecom shares continue to surge
Dealers and analysts said the broad media rally reflected more optimism for economic revival, with the most beaten down stocks leading the way. The FTSE 100 index is up two percent this year and 25 percent above March’s eight-year low. Media and telecom shares have surged as investors have piled out of defensives and into these higher risk stocks. Shares in Granada have fallen 48 percent over the past year and Carlton some 62 percent, but both have shown a strong improvement over the last month.
Clearer guidance on the prospects for advertising are expected with Carlton and Granada’s half-year results. The two firms are also expected to address worries about their planned merger. Carlton has agreed to a takeover by Granada.
“Most of the impetus from this week’s trading has come from a frenzy of rumoured mergers and deals activity in the wake of a better climate and improving sentiment in a market that is still dogged by truly dispiriting economic data,” said David Buik of Cantor Index.
While dealers and analysts see a push to 4,200 many are wary of forecasting a rise above 4,200, convinced the market will consolidate at this level for months if not years.
Europe’s fifth largest mobile phone company mmO2, increasingly seen as a takeover target, reports first half numbers, while BT will also update investors.
Darren Winder, British equity strategist at UBS Warburg said British equities were undervalued.
