Footsie off to a positive start

The FTSE 100 Index was back above the 5500 threshold today due to the buzz created by a £7bn (€10.3bn) merger of Boots and Alliance UniChem.

More than 33 million shares in Boots changed hands as investors either welcomed the marriage or took the view that it could flush out rival offers.

The Footsie doubled early gains to stand 26.1 points higher at 5503.8 by mid-morning, with the latest takeover activity coming at the end of one of the busiest summers for the London market in recent years.

Shares in Boots were ahead 6% or 36.5p to 645p and Alliance UniChem was 2% or 18.5p stronger at 885p on news of the merger, which will deliver at least £100m (€147m) in savings.

Other drug-related stocks in the Footsie were higher, including pharmaceuticals companies GlaxoSmithKline and AstraZeneca which gained 23p and 36p to 1465p and 2671p respectively.

Elsewhere, mortgage bank Northern Rock failed to benefit from a strong third quarter trading update. While the company said profits were in line with hopes, analysts said profit-takers had moved in to send shares 16p lower to 819p.

Other banks were encouraged by the Northern update, however, as Barclays rose 4.5p to 577.5p and Royal Bank of Scotland cheered 9p to 1618p.

Meanwhile, the latest trading woes at home furniture retailer MFI caught the eye of investors in the FTSE 250 Index.

MFI said orders were running 31% below last year and would result in a small loss for the group if the present performance continued. With chief executive John Hancock also stepping down, shares fell 7% or 7.75p to 101p.

Somerfield fell 6.25p to 191.25p following a media report that a consortium featuring Apax Partners was close to pulling out of the £1bn (€1.47bn)-plus race to buy the supermarket.