Brown's budget boosts FTSE

The FTSE 100 Index closed above the 6000 mark tonight for the first time since March 2001 as the City digested Chancellor Gordon Brown’s 10th Budget.

The FTSE 100 Index closed above the 6000 mark tonight for the first time since March 2001 as the City digested Chancellor Gordon Brown’s 10th Budget.

Previous sessions had seen London’s index of leading shares smash through the landmark barrier during early trading but fall back below 6000 at the close.

But merger interest in ITV and strong gains from property firms on the back of the Chancellor’s speech in the House of Commons today ensured the Footsie closed 16.2 points higher at 6007.5.

ITV was among the day’s top blue chip risers as its share price soared more than 9% or 11p to 128p after it rejected a proposal from a consortium featuring private equity firms Blackstone and Apax Partners.

The City took the view that managers at the broadcaster would now have to work harder to please investors, possibly by increasing its planned programme to buy back shares.

Many analysts agreed that ITV was justified in rejecting the approach from the consortium, which appeared to be keen to avoid paying a premium for full control.

But ITV was beaten to the top of the leaderboard by property companies Land Securities and British Land, while Hammerson and Liberty International also made strong gains.

It came after the Chancellor overhauled his proposals for Real Estate Investment Trusts (REITs) so that developers wishing to convert to REIT status would have to pay a charge of just 2% of the market value of the properties concerned compared with estimates by some commentators as high as 20%.

It added more than £1.5bn (€2.2bn) to the value of the UK’s four largest property firms as shares in Land Securities surged 13% or 237p to 2080p and British Land gained 12% or 138p to 1300p. Hammerson and Liberty International also ticked higher – up 110p to 1300p and 85p to 1225p respectively.

The companies were tracked by ICI which gained 5% or 16.75p to 362.5p on talk of interest from US rival DuPont, although some analysts felt a pensions deficit of £1.5 billion might scare any predator off.

The market was also confident that Argos owner GUS could field more approaches from US-based private equity firms for its Experian unit after it was reported that Bain Capital and Thomas H Lee recently had a £7bn (€10bn) proposal rebuffed. GUS improved 3% or 37p to 1129p.

But investors trimmed positions in the insurance sector after an exciting start to the week saw Prudential shares shoot up in the wake of its rejection of a £17bn (€24.5bn) merger plan with rival Aviva. Prudential faded 21p to 720.5p today and Aviva eased 10.5p to 819.5p.

The day’s biggest blue chip risers were Land Securities up 237p to 2080p, British Land up 138p to 1300p, ITV 11p stronger at 128p, and Hammerson up 110p to 1300p.

The heaviest fallers were Corus off 3p to 91p, Schroders down 37p to 1236p, Prudential slipping 21p to 720.5p and Cable & Wireless down 3p to 109.75p.

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