Aviva takeover of RAC buoys FTSE

The £1.1bn (€1.6bn) takeover of the RAC by insurance giant Aviva was given the thumbs up by investors today as London shares pushed forward.

Aviva shares advanced 2% or 12p to 674.5p to feature high among the blue-chip risers as the City accepted the logic of a tie-up with the 108-year-old motoring organisation.

With broadcaster ITV also posting annual profits well ahead of consensus expectations, the FTSE 100 Index pushed ahead by 24.5 points to 5035.4 by mid-morning.

ITV said higher than anticipated cost savings from the merger between Granada and Carlton led to a 57% rise in pre-tax profits in its first annual results as a unified company.

Shares in the broadcaster stood second on the risers board – up more than 4% or 5.25p to 124.75p – as investors also warmed to news that advertising revenues rose 4.7% last year. Top of the pile today was investment fund manager Man Group, rising 5% or 73p to 1488p.

Investors in Cairn Energy shook off the disappointment of its likely ejection from the Footsie by lifting its shares by 34p to 1238p as oil prices stayed within a whisker of record highs.

The higher cost of crude partly explained the downbeat mood across the Atlantic overnight where the Dow Jones Industrial Average closed 24 points down at 10912. A barrel of benchmark light crude traded at 54.59 US dollars today.

Mining stocks were driven higher by ongoing takeover activity and an index of commodity prices which jumped to a 24-year high.

Rio Tinto bounced 31p to 1856p on speculation that it might gatecrash the race for Australian miner WMC Resources, which agreed a takeover with BHP Billiton yesterday. BHP shares were 3% or 20.5p higher at 760.5p.

Airports operator BAA was 2p ahead at 601.5p after airlines slashing fares in February to encourage winter travel contributed to a 4.6% hike in traffic.