Takeover talk boosts Footsie

Takeover talk involving two high-profile stocks kept investors from fretting today over the prospect of higher interest rates in the United States.

The potential for more heavyweight deals to follow the recent takeover moves for BAA and AB Ports lifted shares in music group EMI by 8%, while steel giant Corus rose by as much as 6% earlier in the session.

As a result, the FTSE 100 Index closed 26.3 points higher at 5678.6, even though the Dow Jones Industrial Average fell by 120 points on Tuesday night and was near to its opening mark by the time of London’s close today.

Wall Street markets have been dogged by fears over higher interest rates, with the Federal Reserve due to deliver another increase tomorrow night.

Corus shares spent much of the session at the top of 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 near to a high for the year before settling 1% higher, a gain of 5.75p to 434p.

Mid-cap stock EMI closed 8% higher 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 23.75p to 307.5p, although the increase still left the stock below Warner’s latest offer price of 320p.

Among mid-cap stocks moving in the opposite direction, recruitment company Hays fell 9% after an update on first half trading left investors cold.

Even though Hays forecast a 14% rise in net fees, shares dipped 13.5p to 137.25p as the City worried about the company’s dependency on the UK, where unemployment rates are rising. Rival Michael Page International was impacted as its shares fell 16.5p to 331.75p.

Equipment hire company Ashtead was another heavy faller in the FTSE 250 Index, as strong results and a forecast of further progress proved the cue for investors to take profits after a recent strong run for the stock. With the appointment of a new chief executive adding to the uncertainty, shares were off 23.75p at 162p.

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 21.5p to 630p, while Severn eased 37p to 1135p.

Among other risers, broker ICAP rose 3% or 15.75p to 500p as it prepared to replace BAA in the FTSE 100 Index on Friday.

The biggest Footsie risers were Reed Elsevier up 16p at 537.5p, Rexam ahead 13.25p at 506.75p, Cairn Energy up 55p at 2137p and Sage Group ahead 5.75p at 225.25p.

The biggest fallers were United Utilities down 21.5p at 630p, Severn Trent off 37p at 1135p, Vedanta Resources down 33p at 1252p and PartyGaming off 2.5p at 113.5p.