Slow start for FTSE

A major deal in the housebuilding sector ensured the second-tier FTSE 250 Index stole a march on its top flight counterpart today.

While the FTSE 100 Index stood 1.8 points lower at 6309.1, the FTSE 250 rose 45.9 points to 11389.2 after shares in Barratt Developments gained in the wake of its proposed £2.2 billion acquisition of Wilson Bowden.

The possibility of an approach for estate agency group Countrywide added to the excitement as its shares lifted by 6% at mid-morning.

Among blue-chips, Johnson Matthey made the biggest gain – up 5%, or 77p to 1569p – after the chemicals firm benefited from a broker upgrade by UBS.

Sentiment was also positive towards Cable & Wireless after Credit Suisse raised its target price to 200p from 124p and added it was optimistic about the company’s international arm. Shares were up 3%, or 4.75p to 176.25p.

Credit Suisse was also thought to be behind a 2% rise for BT, as it was reported that the banking giant intended to use the UK firm for all its telecoms needs. BT was up 6p at 315p.

Elsewhere, shares in Sainsbury’s held most of the gains seen on Friday following the emergence of bid interest from three private equity firms.

The stock was a penny lower at 506p, but Marks & Spencer was down 11p at 706.5p after surrendering a large chunk of the gains seen prior to the weekend.

In the FTSE 250, Barratt was sharply higher, up 53p to 1281p, after it won the auction for Wilson Bowden with an offer worth £2.2 billion. The deal makes Barratt a rival to Persimmon as one of the UK’s biggest housebuilding firms. Wilson Bowden shares lost some of their recent gains to stand 42p lower at 2271p.

Countrywide also moved higher after it was reported that private equity group Apollo had approached the company about a possible £950 million deal.

The news was also positive for property website Rightmove, which is part-owned by Countrywide and rose by 19p to 487p.