Bid interest in British Gas owner Centrica reared up again today as investors took a punt on the possibility of a takeover move from Russia’s Gazprom.
Centrica shares rose by 4% and with worries over higher interest rates also easing, the FTSE 100 Index lifted 41.9 points to 5833.4 by the close – a gain of 0.7%.
The Footsie is now at its highest level since the middle of May, as markets worldwide show signs of coming to terms with the threat of higher borrowing costs.
Some relief came on Thursday night after comments from the US Federal Reserve suggested policymakers may now pause for breath after increasing the cost of borrowing for the 17th month in a row.
The Dow Jones Industrial Average rose by 2% yesterday and held on to all of those gains when trading opened on Friday.
Miners were among the main beneficiaries as concerns that higher interest rates will curb world economic growth started to diminish.
They were also buoyed by the rising cost of metals such as gold and copper as Xstrata improved 62p to 2050p and Vedanta Resources cheered 27p to 1363p.
The gains of the miners were overshadowed by Centrica after Gazprom’s chief executive Alexei Miller was quoted at a press conference in Moscow as saying that the Kremlin-owned gas monopoly was still looking at Centrica. Shares in the UK company rose 4% or 11.25p to 285.25p.
Another potential takeover candidate, steel giant Corus, also rose 11.25p to 456.5p as the Mittal and Arcelor merger continued to raise hopes among investors that the UK company could be next in line for a bid.
Elsewhere, Anglo-Australian company Brambles rose 10.5p to 430p, a gain of 2.5% came after it sold its Cleanaway UK business to Veolia for £595 million, which was more than expected.
Among other stocks on the move, broker ICAP made a disappointing start to life as a blue-chip stock.
The group has been promoted to the Footsie in place of BAA following its sale to Spanish firm Ferrovial, but ICAP shares shares fell 10.75p to 498p on its first day.
Outside the top flight, shares in Associated British Ports fell back after it emerged that Australian bank Macquarie was no longer interested in a head-to-head takeover battle with Goldman Sachs. With the US investment bank now certain to land the UK company, shares in AB Ports fell 2% or 15p to 903p.
Elsewhere, shares in housebuilder Berkeley Group were ahead 16p at 1213p, helped by its positive comments on the UK housing market.
Announcing a 6% rise in annual profits to £165 million, Berkeley said there was still a “feel-good factor” at work in the market.
The biggest Footsie risers were Centrica up 11.25p at 285.25p, Amvescap ahead 17.75p at 495.25p, Prudential up 19.5p at 611p and Xstrata ahead 62p at 2050p.
The biggest fallers were Boots Group down 17p at 769.5p, ICAP off 10.75p at 498p, Alliance UniChem down 18p at 1022p and Scottish & Newcastle off 5.75p at 509.75p.