Boots leads FTSE

Retailer Boots led the FTSE 100 Index above the 5500 barrier today as investors cheered its proposed merger with Alliance UniChem.

News of the £7bn (€10.3bn) tie-up made Boots one of the session’s most traded stocks and also injected enthusiasm into others in the pharmaceuticals sector.

This helped propel the Footsie to a fresh four-year high – up 23.8 points to 5501.5 – 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 cheered 4% or 24.5p to 633p and Alliance UniChem was 1% or 8.5p stronger at 875p 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 17p and 21p to 1459p and 2656p respectively.

Online gaming firm PartyGaming also cheered the mood as investors regained confidence following the lacklustre reception to smaller rival 888.com’s flotation last week. PartyGaming added almost 3% or 2.5p to 93.75p, although 888.com lost half a penny to 168p.

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 16.5p lower to 818.5p.

Other banks were encouraged by the Northern update, however, as Barclays rose 13.5p to 586.5p, Alliance & Leicester lifted 11.5p to 871.5p and Royal Bank of Scotland cheered 10p to 1619p.

Catering group Compass was the heaviest blue-chip faller as Credit Suisse cut its target price on the stock following its latest profits downgrade last week. Shares weakened 3% or 6.5p to 199.75p.

A string of miners were also in the red, including BHP Billiton down 18.5p at 897.5p, Anglo American, down 24p at 1666p and Xstrata falling 20p to 1449p.

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 8% or 9p to 99.75p.

Somerfield fell 4p to 193.5p 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.

And French Connection weakened 9.25p to 257.75p as it said it had dramatically scaled back the use of the FCUK slogan following a 9% fall in like-for-like sales for the six months to July 31.

The highest Footsie risers today were Boots up 24.5p to 633p, Wolseley adding 41p to 1240p, PartyGaming up 2.5p at 93.75p and Barclays rising 13.5p to 586.5p.

The heaviest fallers were Compass down 6.5p to 199.75p, BHP Billiton off 18.5p to 897.5p, Northern Rock down 16.5p at 818.5p and Cable & Wireless losing 2.25p to 140.75p.