FTSE 250 breaks 10,000 barrier

Investors had fresh cause for celebration today after London’s second-tier FTSE 250 Index broke through the 10,000 landmark for the first time.

The index – which contains the next largest 250 companies in the UK after the blue-chip top 100 – has enjoyed an excellent run for many of the reasons its larger counterpart has been driven above 6,000 and beyond.

Acquisition activity, high oil and metal prices and stronger economic growth have pushed both indices forward and helped the FTSE 250 to gain 46.8 points today to hit 10,013.7. The FTSE 100 Index stood at 6,108.3 earlier today.

Analysts argue another factor for the growth in the market is the broader spectrum of companies in the 250 index – as over half of the Footsie 100 is dominated by oil firms, banks and telecoms alone.

In addition, whereas the FTSE 100 is affected by what happens overseas - especially the US – the FTSE 250 remains largely unmoved.

Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said although the FTSE 100 grabs most of the headlines there is an increasing feeling that to gauge the state of UK plc more realistically, it is necessary to look outside.

Among the 250 companies at the centre of recent takeover activity have been glass maker Pilkington, taken over by Japanese firm Nippon Sheet Glass and plasterboard maker BPB, swallowed up by French glass maker Saint-Gobain.

However, a number of 250 firms are the subject of ongoing battles pushing their share prices ever higher.

The London Stock Exchange – which has rejected successive approaches from Deutsche Boerse, Australian bank Macquarie and Nasdaq, and just this week scotched reports that it had received a takeover approach from the New York Stock Exchange – has been one of the best performers. The value of its stock has gone up by almost 100% this year.

Its performance has only been beaten by oil and gas exploration group Soco International which has seen its shares rise by 103% in the same period as energy prices soar. JKX Oil and Gas and power station owner Drax have also bubbled higher.

Mining companies in the 250 have benefited from metal prices hitting all-time highs – Vedanta Resources and Aquarius Platinum have seen stock shoot up almost 90% and 72% respectively.

Mr Hunter said although firms at the upper end of the FTSE 250 are just about to enter blue-chip territory and be promoted to the top 100, further down well-established companies are making progress through their largely UK only exposure.

“There are some interesting stories worth looking at in the FTSE 250 – and with some eyes devoted solely to the FTSE 100, there are opportunities too,” he added.