Takeover speculation boosts FTSE

Scottish & Newcastle shares jumped 20% today after rivals Carlsberg and Heineken admitted their interest in a joint takeover bid.

Analysts have speculated the pair could come up with an 800p a share offer for S&N, valuing the historic brewer at £7.5 billion. Shares rose 124.5p to 761p, even though Carlsberg and Heineken said no formal approach had yet been made.

The possible resumption of heavyweight takeover activity caused the FTSE 100 Index to surge by 60.9 points at 6675.2 by lunchtime. The Footsie had been drifting near to its opening mark prior to the S&N development.

The mood was also helped by renewed hopes for a cut in interest rates, after minutes from the Bank of England’s last rate-setting meeting showed members considered cutting borrowing costs in the wake of the Northern Rock crisis.

Banking stocks were on the front foot, offsetting weakness elsewhere after Rio Tinto depressed the mining sector with an update showing a 6% fall in third quarter copper production.

Rio Tinto shares were 108p lower at 4312p, a drop of 2%, while Lonmin dipped 23p to 3555p and Vedanta Resources slipped 26p to 2139p.

Five out of the six blue-chip fallers came from the sector, although the declines were not as great as earlier in the session.

In the banking industry, shares made progress after a disappointing couple of sessions. HBOS rose 16.5p to 882.5p, Royal Bank of Scotland cheered 14p to 528.5p and HSBC lifted 11p to 960.5p.

Northern Rock was the exception, falling 1.5p to 222p amid continued uncertainty over prospects for the group.

Energy stocks gave back some of their gains from yesterday, when oil prices surged to a new record high of 88.20 US dollars a barrel. With prices steadying, BP shares fell 2.5p to 624.5p and Royal Dutch Shell dipped 5p to 2076p.

Elsewhere in the top flight, shares in Morrisons gained 13p to 300p after latest industry figures indicated strong growth in the supermarket sector. Morrisons attracted special attention because its figures showed a slight improvement in performance.

The news involving Scottish & Newcastle caused shares in a number of other leisure firms to rally. Peroni owner SABMiller, which recently announced plans to merge its US arm with rival Molson Coors, rose 44p to 1473p, while in the pubs sector Enterprise Inns lifted 16p to 628.5p and Punch Taverns added 25p to 1049p.