FTSE breaks 6500 mark

The London market soared past the 6500 level today, maintaining its six-and-a-half-year high amid further merger and acquisition activity.

Royal Bank of Scotland provided most of the excitement among blue-chip investors after it emerged the group was considering a rival bid for Dutch bank ABN Amro.

The FTSE 100 Index closed up 53.8 points at 6516.2, showing no signs of slipping from the high seen on Friday, when it reached levels not seen since November 2000.

RBS was 48p higher at 2071p after revelations that the group was looking at ABN in conjunction with Belgium's Fortis and Spain's Santander.

The news provided a lift for the rest of the sector with Bradford & Bingley up nearly 3%, or 12.25p, to 471.25p and Lloyds TSB 11.5p higher at 586p.

Barclays slipped back from earlier gains but was still 12.5p ahead at 756p amid speculation that the bank will not be rushed into tabling a merger offer for ABN.

Investment firm Man Group also featured high up on the risers board after a broker upgrade from HSBC, citing its solid fundamentals and US stock market debut plans for Man Financial.

Shares were up 11.5p at 569p.

Meanwhile, metal prices boosted the mining sector with Vedanta Resources topping the day's risers with shares up more than 3%, or 46p, at 1443p. BHP Billiton also saw shares rise, up 28p at 1180p while Rio Tinto lifted 65p to 3180p.

Carnival benefited from the announcement that its interim dividend is to rise, with the stock ahead 55p at 2440p.

But on the fallers' board, Imperial Tobacco shares shed the most, with a loss of 2%, as investors reacted to speculation that the firm behind Embassy cigarettes could be poised to make a renewed offer for Franco-Spanish tobacco group Altadis. The stock was down 45p at 2217p.

Continued takeover activity at Alliance Boots also did nothing to help its shares as the stock fell 1p to 1058p, despite reports that private equity group Terra Firma had received access to the pharmacy giant's books as it prepares to table a rival offer for the group.

Kingfisher slipped 1.5p to 268.5p, reflecting concerns about the impact of warm weather on sales during the key trading period for the B&Q retailer.

The group was also downgraded by HSBC, as was fashion retailer Next, which saw shares drop 13p to 2274p.

Outside the top index, music group EMI fell 6p to 220p after reports of weak album share figures for the group, which could undermine a potential tie-up with Warner Music.

Fellow FTSE 250 firm DS Smith, the packaging maker due to give a trading update on Thursday, saw its shares shed more than 6% following a downgrade from Goldman Sachs.

Goldman analysts said increased costs of cardboard boxes - an input expense for some of its operations - could hit the group's bottom line.

DS Smith shares fell 14.75p to 224.75p.

The biggest Footsie risers were Vedanta Resources up 46p at 1443p, Bradford & Bingley up 12.25p at 471.25p, BHP Billiton ahead 28p at 1180p and Royal Bank of Scotland up 48p at 2071p.

The biggest Footsie fallers were Imperial Tobacco off 45p at 2217p, Scottish & Newcastle down 8.5p at 579.5p, British Airways down 4p at 513p and Reed Elsevier down 4p at 616p.