Takeovers dominate FTSE rise

Financial and mining stocks led a rally for London’s leading shares as takeover speculation continued to buoy the market.

Banking group Standard Chartered and miner Rio Tinto were two of the biggest gainers in the session as speculation put the two groups at the centre of bid interest.

The FTSE 100 Index closed up 41.6 points at 6565.7, pulling back from a 1% fall earlier in the session, after a strong opening on Wall Street added impetus to afternoon’s trading.

Standard Chartered ended the day 62p higher at 1605p – a gain of 4% – as rumours of Middle Eastern interest and a potential £21 a share bid circulated the City.

There were further gains across the banking sector with Northern Rock up 41p at 1096p after a bullish note from Cazenove and HSBC rose 18.5p to 955.5p after it reported strong growth at its Malaysian arm.

Rio Tinto climbed 3%, or 113p, to 3652p as takeover speculation increased, with BHP Billiton again mentioned as a possible bidder. The news saw a rebound among fellow commodity stocks with Lonmin 132p higher at 3925p following a broker upgrade, and Anglo American ahead 83p at 2935p.

Yell shares also benefited from rumours that Google was interested in buying the directories business. The stock fell heavily last month after a profits warning, but rallied yesterday and was up another 11p at 508.5p today.

Power companies were on the front foot after speculation linked French utility EDF Energy to a possible takeover move for Npower owner RWE.

While EDF denied it had been in contact with German authorities about an approach to RWE, the report caused the likes of Scottish & Southern Energy and International Power to rise on consolidation hopes.

International Power lifted 4.75p to 448.25p and Scottish & Southern gained 26p to 1512p.

Meanwhile, takeover speculation surrounding Friends Provident faded after strong gains yesterday. The life assurer was 2.25p lower at 207.75p.

Hammerson slid 19p to 1654p after reports that the chief executive has said he is not putting the company up for sale.

Brewing group SABMiller topped the fallers’ board with a loss of 16p to 1191p ahead of its full year results next week, which are expected to reveal a continued poor performance in the US. Next was also down 29p at 2398p after a broker downgrade.

The sale of Thomson Corp’s educational assets to private equity buyers for a stronger-than-expected 7.75 billion US dollars (£3.9bn) provided a boost to fellow education groups Pearson and Reed Elsevier. Pearson, which has significant US educational assets, rose 15p to 890.5p, while Reed Elsevier closed up 18p at 663p.

In the FTSE 250, software group Autonomy Corp led the list of share fallers after saying it would place another 9.5 million shares. Shares were off 38p at 732p.

And oven maker AGA Foodservice rose 9p to 410.5p after it said profits rose by 15% during 2006.

The biggest Footsie risers were Standard Chartered up 62p at 1605p, Northern Rock ahead 41p at 1096p, Lonmin up 123p at 3925p and Rio Tinto ahead 113p at 3652p.

The biggest Footsie fallers were SABMiller off 16p at 1191p, Next down 29p at 2398p, Hammerson off 19p at 1654p and Friends Provident down 2.25p at 207.75p.