Blue chips drive slight FTSE gain

The prospect of a takeover battle for ICI left shares in the Dulux-to-chemicals firm at a fresh eight-year high today.

The blue-chip stock was up 17%, a gain of 91.5p at 640.5p, as investors eyed further developments following the company’s refusal to engage in talks with Akzo Nobel at a potential bid price of 600p a share.

The rest of the London market failed to benefit from the speculation, as an initial gain disappeared to leave the 7.1 points lower at 6725.3 by mid-morning.

Other strong risers included Rolls-Royce after it announced its first batch of contracts from the Paris Air Show. The headline deal involved its largest ever engines and after-care order for its civil aerospace business, a contract worth 5.6bn (€4.17bn) with Qatar Airways.

Meanwhile, FT publisher Pearson fell 1% after reports at the weekend said it was considering a counter-bid for Dow Jones, the owner of the Wall Street Journal. The stock slipped 8.5p to 864.5p.

Interest in supermarket giant Sainsbury’s also cooled after Friday’s excitement over stake-building by a Qatar-backed investment fund. The stock fell 2.5p to 587.5p, while Tesco added 1.75p to 462p ahead of a trading update from the sector’s biggest firm on Tuesday.

Irish company Tullow Oil led the second tier for much of the session after revealing a significant discovery off the coast of Ghana. Evolution Securities revised its share price target to 500p, causing shares in Tullow to rise 44p to 453p.

It was later overtaken at the top of the FTSE 250 risers board by Domestic & General, the warranties specialist which is currently the subject of a takeover approach from household repairs business Homeserve.

D&G shares were 11% higher, a gain of 128p to 1280p.

Specialist lender Cattles was another FTSE 250 riser, as a positive trading update caused shares to rally 10.25p to 411p.