Green plan for M&S prompts FTSE surge

News that retail billionaire Philip Green was mulling a bid for troubled high street chain Marks & Spencer gave the London market a late lift today.

Shares in M&S soared to the top of the FTSE 100 Index, up nearly 19% or 54.5p to 345p, after the owner of Arcadia and BHS said he was planning a takeover approach in the next few days.

The announcement helped boost the Footsie after falls in gas and oil companies had limited progress earlier in the day. After rising 32 points during the day, the FTSE 100 Index closed 15.3 points ahead at 4453.6.

BP saw its stock drop more than 2% and shares in Shell were also down following a fall below 40 US dollars a barrel in the US futures price of light crude.

Although that restricted gains in London, global equity markets reacted positively, with the Dow Jones Industrial Average rising nearly 88 points shortly after London’s close.

The strong pound and new figures showing continued buoyancy in the housing market – increasing fears of an interest rate rise next week – also raised the downside pressure on London equities, analysts said.

Britain’s biggest building society, the Nationwide, said the average house now costs £149,020 (€223,000) – up 9% on the beginning of the year.

Other top-flight retailers apart from M&S were doing well, with chemist chain Boots gaining 6%, or 43.5p, to 675.5p after reporting a 2.7% rise in annual profits to £544.6m (€667.5m).

The improvement left it second in the risers board and calmed fears among investors about moves by rival retailers into the healthcare products market.

Amid speculation about further consolidation in the retail sector, Sainsbury’s was fourth in the top flight, adding 3% or 8.25p to 274p, while Tesco lifted 2.25p to 252.25p and Morrisons added 1.75p to 231.5p.

Barclays was the heaviest faller – down more than 2% or 11.75p to 484.5p - despite reporting a strong start to 2004 with first quarter profits “significantly” ahead on a year earlier.

The appetite of investors for other financial stocks was weak with HBOS falling 5p to 717.5p, Alliance & Leicester losing 4.5p to 829.5p and Bradford & Bingley dropping 5.5p to 277p.

InterContinental Hotels also fell 3p to 510p after it reported a doubling in first quarter profits as it continued to see a pick-up in conditions on both sides of the Atlantic.

A major mover outside the top flight was Woolworths, which added 2.5p to 44.5p after reporting a 6.5% increase in first quarter sales.

Also on the up was Dairy Crest as it reported 3% growth in annual sales. Its shares took a knock earlier in the week after losing a milk supply contract with Asda, but bounced back by 6% or 21.5p to 372.5p today.

However, Iceland-to-Booker retail group Big Food lost ground after sales came under pressure from price-cutting rivals. Shares fell 2p to 99p.

The biggest risers were M&S up 54.5p to 345p, Boots gaining 43.5p to 675.5p, mm02 up 3p to 96.5p and Sainsbury ahead 8.25p at 274p.

The largest fallers were Barclays, down 11.75p to 484.5p, GKN losing 5p to 225p, BP off 10p to 484p and Bradford & Bingley down 5.5p to 277p.