Takeover speculation drives FTSE upwards

Takeover speculation drove the London market today as attention switched to the possibility of deals for music group EMI and steel giant Corus.

The activity helped the FTSE 100 Index shrug off anxiety over US interest rates, which again dogged world markets after the Dow Jones Industrial Average fell 120 points ahead of Thursday’s decision from the US Federal Reserve.

The Footsie reached mid-morning 14.8 points higher at 5667.1, after recovering from a brief wobble at the start of the session.

Corus shares topped the Footsie risers board as attention focused on the next move in the steel industry following the merger of Mittal and Arcelor.

Speculation pointed to an approach from Russian firm Severstal, the company spurned by Arcelor in favour of Mittal at the weekend.

Shares in Corus were up 6% at one stage before settling 3% higher, a gain of 14.5p to 442.75p.

Mid-cap stock EMI rose 9% after it confirmed market rumours that it was involved in a takeover tug-of-war with Warner Music Group.

EMI said both sides had tabled bids to buy the other, with none of the offers so far proving successful.

The impact on EMI shares meant the former blue-chip company rose 26p to 309.75p, although the increase still left the stock below Warner’s latest offer price of 320p.

On a quiet day for corporate results, shares in bus and trains group Stagecoach shares spent much of the session in positive territory after revealing pre-tax profits for the year to April 30 jumped 7% to £140.6 million. Shares later slipped to stand unchanged at 113.25p.

Rival transport company FirstGroup was up 7p to 459p.

Back in the top flight, power providers United Utilities and Severn Trent were lower as a result of new investors losing the right to the latest dividend payment. United fell 19.5p to 632p, while Severn eased 32p to 1140p.