Takeover rumour and metals raise FTSE

Takeover speculation and higher metals prices helped drive the London market forward to steady gains today.

The day was marked by advances for heavily weighted mining stocks and rumours of a potential bid for ICI late in the session, helping the FTSE 100 Index close 50.6 points ahead at 6366.1.

ICI was the biggest blue-chip gainer with a late surge up the risers’ board as its shares rocketed more than 7%, or 35.75p, to 539.75p on rumours of a potential bid for the Dulux paint maker from US firm Dow Chemicals.

In the mining sector, high copper prices buoyed all of the heavily-weighted stocks. Xstrata was ahead 88p at 2684p. Rio Tinto 107p higher at 2995p, and Kazakhmys gained 41p to 1196p.

London-listed utility companies also enjoyed an early surge today with speculation over E.ON’s next move following its failure to land Spain’s Endesa.

Scottish & Southern Energy rose nearly 2%, up 24p to 1582p, as it was seen as the sector’s most likely bid target after Scottish Power’s takeover last year.

E.ON abandoned its 42.4 billion euro (£28.7 billion) bid to gain control of Endesa yesterday after reaching a deal with rivals Acciona and Enel, which had both built up stakes in the company.

Among other stocks rising on consolidation hopes, British Gas owner Centrica rose 7.5p to 393.25p and International Power lifted 10.75p to 411.25p.

Brewer Scottish & Newcastle also made gains on the back of an upgrade from UBS as speculation of private equity interest continued to froth around the firm. The shares closed ahead 16p at 605.5p.

With the Easter break looming, major corporate developments were thin on the ground. Power company Drax was 5p lower at 782p and Enterprise Inns 5p lower at 651p, although firms in the financial sector were also on the back foot.

Royal Bank of Scotland was down 8p to 1980p as the company announced plans to sell its securities business to French bank BNP Paribas for an undisclosed fee. Peer HBOS also lost ground today, off 1p at 1043p.

And closed life fund manager Resolution failed to hold on to gains seen after it posted full-year results ahead of market expectations. At one stage shares were 11.5p higher at 637p, but later stood 0.5p lower at 625p as investors continued to fret about the company’s failure to complete takeover talks.

In the second tier, business services group Rentokil Initial was in good shape with a rise of more than 3%, up 5.25p at 173p as traders mulled speculation about possible private equity interest.

Halfords rose after reporting underlying sales growth of 5.3% and forecasting pre-tax profits in line with expectations. Shares were up 6.5p at 387.5p as analysts welcomed the “steady and solid” update.

But Bloomsbury Publishing shares were down on the day it posted a 74% fall in annual profits, despite optimistic comments about future trading. The stock was 6.25p lower at 185.25p.

The biggest Footsie risers were ICI up 35.75p at 539.75p, Rio Tinto ahead 107p at 2995p, Kazakhmys up 41p at 1196p and Xstrata ahead 88p at 2684p.

The biggest Footsie fallers were Enterprise Inns off 5p at 651p, Drax down 5p at 782.5p, Land Securities off 13p at 2161p and DSG International down 1p at 170p.