FTSE moves clear of 6800 mark

More than £2.1 billion was added to the value of Prudential today after Aviva published terms of its plan to create the world’s fifth largest insurer.

Shares in the Pru leapt 13% even though its board rejected the all-paper proposal and Norwich Union owner Aviva has vowed not to go hostile.

Analysts said rival insurers might make a move now that the Pru is in play and other UK firms could become bid targets as well, pushing shares higher across the sector and leaving the FTSE 100 Index ahead by 28.6 points at 6028 by mid-morning.

The Pru cheered 90p to 762p on the back of the approach from Aviva – headed by Richard Harvey – which would create an insurance giant with a market value of £36 billion.

Mr Harvey said the deal had compelling strategic, financial and operational logic but shareholders in his company were worried that the company may have to overpay to win control.

Shares in Aviva recovered after a sluggish start to stand 6.5p to 857p while Legal & General added 6.75p to 150.25p elsewhere in the sector and Friends Provident ticked 6.5p higher to 220p.

Mining giant Anglo American rose 62p to 2097p on a report that Stora Enso was considering a bid for its Mondi paper unit.

It was a good day generally in the mining sector, with BHP Billiton ahead by 18p at 986.5p and Kazakhmys rising 16.5p to 1003p – the first time its shares have been worth more than £10 each.

Outside the top flight, car dealer Lookers pleased the City with its annual results as it fights a hostile £258 million bid from rival Pendragon. A rise of 28% in pre-tax profits ensured Lookers shares motored ahead 17p to 729.5p.