FTSE in good spirits

News of a tie-up between miner Rio Tinto and Canadian aluminium firm Alcan put the London market in positive spirits today.

The deal saw heavily weighted miners on the front foot amid hopes for further consolidation in the sector, which helped propel blue chip stocks ahead.

The FTSE 100 Index closed up 82.6 points at 6697.7, buoyed by a strong opening on Wall Street after a fall in jobless figures and an upbeat mood surrounding corporate earnings figures lifted sentiment in the US.

Rio Tinto was the session’s biggest faller – down nearly 5%, or 183p, to 3810p - as investors digested news of the all-cash deal and some analysts voiced concerns about the substantial amount of debt the company would need to take on for the 38.1 billion US dollar (£18.7bn) deal to proceed.

But the news buoyed fellow mining stocks with Vedanta Resources leading the pack, up by more than 6%, or 109p, at 1800p. Antofagasta followed it up the risers board, up 43p to 715.5p, while Xstrata lifted 153p to 3427p.

British Airways made strong gains after Spanish carrier Iberia agreed to open up its books to the TPG-led consortium, of which BA is part, following TPG’s preliminary takeover offer in March. The stock rose more than 5%, or 22p to 440.5p.

B&Q owner Kingfisher benefited from an upgrade from Morgan Stanley, which said the group was the “undisputed market leader in UK DIY”. Shares increased by 5.25p to 224.75p.

The upgrade helped Argos and Homebase owner Home Retail Group lift 17.75p to 456.5p.

A broker upgrade saw broadcasting giant BSkyB continue its rally from yesterday after the company reported 90,000 net customer additions in its fourth quarter. The stock was ahead 9p at 709p.

Meanwhile news of the appointment of former Asda deputy chairman Ian Gibson to succeed Ken at Morrisons helped buoy the supermarket chain 3p to 316.75p.

But fading takeover talk saw Costa Coffee parent Whitbread fall 2%, or 48p, to 1898p, as rumours died down of a bid from touted suitor and real estate group Starwood Capital. Fellow pubs group Mitchells & Butler slipped 6.5p to 868.5p.

International brewing group SABMiller meanwhile was up almost 3%, or 36p, to 1306p, after a senior executive at the group’s Colombian business said the group was considering a possible acquisition of a majority stake in one of the country’s state-controlled spirits companies.

In the FTSE 250, insurance group Admiral fell 28p to 862p after disappointing investors with news it has decided against selling a stake in its price comparison website Confused.com to private equity.

Talks had valued the group at between £600m and £650m, but some analysts had even suggested the business may be worth up to £1bn.

The biggest Footsie risers were Vedanta Resources up 109p at 1800p, Antofagasta ahead 43p at 715.5p, British Airways up 22p at 440.5p and Xstrata up 153p at 3427p.

The biggest Footsie fallers were Rio Tinto off 183p at 3810p, Whitbread down 48p at 1898p, Hammerson off 12p at 1355p and Mitchells & Butler down 6.5p at 868.5p.