FTSE slips into red

The London market slipped into the red today despite strong advances made by takeover targets Hanson and Reuters.

The FTSE 100 Index dipped 13.2 points to 6542.3 by mid session trading.

Earlier market interest was focused on the state of the UK’s economy after figures revealed inflation dropped sharply last month.

Investors are now looking to tomorrow’s key quarterly inflation report from the Bank of England for further indications of the direction of interest rates.

While the Footsie remained subdued, blue-chip building materials company Hanson was firmly on the front foot after it accepted a £11-a-share or £8 billion takeover by HeidelbergCement of Germany.

Shares were ahead 4%. or 40.5p at 1097.5p.

Reuters also gained 3%, or 18.5p to 624p, after announcing a merger deal with Thomson Corporation of Canada.

Shareholders in the pubs sector meanwhile raised a glass to Enterprise Inns after the company revealed it was exploring its options on tax-efficient REIT status.

Enterprise, which is the UK’s biggest operator of leased and tenanted pubs, said it was looking at its options relating to a switch to a Real Estate Investment Trust, which could unlock value for shareholders.

Enterprise Inns set the pace in the Footsie, with a gain of more than 5%, or 38p to 765p. As well as the possibility of REIT status, it is looking at a refinancing of its balance sheet – a move which could lead to further share buy-backs.

The developments lifted Punch Taverns, which rose 43p to 1386p.

But London’s benchmark index was held back by stocks such as consumer brands giant Unilever, which fell 25p to 1613p after a broker downgrade citing commodity prices and lack of further upside to shares after a recent strong run.

In the FTSE 250 Index, Homeserve shares rallied more than 10% after broker UBS upgraded the emergency call-out firm on the back of hopes for US expansion. The stock was 179p higher at 1947p, after UBS lifted its target price from 2000p to 2350p.

Shipbuilding and services group VT also benefited from an upgrade, with the lift from analysts at Panmure Gordon coming after the company’s full-year results. Shares were 26.25p higher at 548p.

Elsewhere Bristol-based investment management firm Hargreaves Lansdown made an impressive debut on the London Stock Exchange.

Shares were priced at the top end of expectations, but shot up from 160p to 206.5p by lunchtime in conditional dealings.