Footsie off to bright start

Investors returned to the London market today in anticipation of the next round of cross-border takeover activity.

Investors returned to the London market today in anticipation of the next round of cross-border takeover activity.

The stock in focus was Alliance & Leicester after a report suggested that Abbey National owner Banco Santander may be plotting a new raid on the UK banking sector.

The news also sent shares in smaller banks such as Northern Rock and Bradford & Bingley higher, helping the FTSE 100 Index to pick up 23.1 points to stand at 6060 by mid-morning.

Alliance & Leicester was lifted as high as 10% early in the session on the bid rumours, but mild profit taking limited its gains to 7% or 75p to 1197p as the session wore on.

Shares in other banks were heavily traded with Bradford & Bingley rising 17p to 516p in the second tier, while the prospect of consolidation ensured blue-chip Northern Rock rose 14p to 1114p and Lloyds TSB added 5.5p to 536.5p.

But oil giant Royal Dutch Shell was struggling to contribute, falling 3p to 1948p as investors reacted to a drop in the oil price below 70 US dollars a barrel last night. BP was unchanged at 681p.

The heaviest faller was InterContinental Hotels – down 8.5p at 567p – as investors trimmed their positions following a buoyant session for the stock yesterday on the back of rumours that private equity firm Permira was preparing a bid.

Outside the top flight, ice cream maker Richmond Foods lifted 6%, or 39.5p to 741p, after announcing it had backed a 750p a share or £182.2 million takeover offer from US investment fund Oaktree Capital.

Broker upgrades were driving investment in the pubs industry with Enterprise Inns rising 26.5p to 972p after UBS raised its target price for the blue-chip stock.

Smaller rival Greene King added 7% or 53.5p to 805.5p after Merrill Lynch decided the maker of Old Speckled Hen was now a buy compared with its previous neutral rating.

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