FTSE climbs higher

Brewing group Scottish & Newcastle led London shares higher today after European rivals Heineken and Carlsberg confirmed long-running speculation over their interest in the firm.

Shares in S&N jumped 19%, or 119.5p to 756p, as analysts suggested a 800p-a-share price tag, valuing the firm at £7.5bn (€10.7bn).

Investors flocked to the stock despite no formal approach from Carlsberg and Heineken, with S&N describing their break-up proposals as "unsolicited and unwelcome".

The prospect of renewed heavyweight takeover activity gave blue-chip stocks a much-needed boost as the FTSE 100 Index closed the session 63.4 points higher at 6677.7.

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.

Mining giant Rio Tinto was one of the session's top fallers after it disappointed investors with an update showing a 6% fall in third quarter copper production.

Rio Tinto shares were 65p lower at 4354p, although shares elsewhere in the sector picked up from earlier losses with Lonmin up 23p to 3601p and Vedanta Resources lifting 24p to 2189p.

In the banking industry, shares made progress after a disappointing couple of sessions. HBOS rose 7.5p to 873.5p, Royal Bank of Scotland cheered 17.5p to 532p and HSBC lifted 14.5p to 964p.

Northern Rock was the exception, falling 16p to 207.5p 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 a barrel. With prices steadying, BP shares fell 7.5p to 619.5p and Royal Dutch Shell dipped 8p to 2073p.

Elsewhere in the top flight, shares in Morrisons gained 11.75p to 298.75p after the latest industry figures indicated strong growth in the supermarket sector. Morrisons attracted special attention because its figures showed a slight improvement in performance.

Sugar producer Tate & Lyle also continued its recovery off recent lows as it climbed almost 8%, or 32.25p, to 455p. Associated British Foods was 24.5p ahead at 849p.

Telecoms group Carphone Warehouse was up 12p at 341.5p after it signed a multi-year outsourcing deal with Indian firm Patni Computer Systems.

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 33p to 1462p, while in the pubs sector Enterprise Inns lifted 5p to 617.5p and Punch Taverns added 14p to 1038p.

In the second tier, soft drinks firm Britvic leapt 7%, or 22.5p, to 340p after it posted an upbeat trading statement showing the firm's resilience to the summer's poor weather. Britvic said it remained comfortable with operating profit estimates of up to £81m (€116.3m).

The biggest Footsie risers were Scottish & Newcastle up 119.5p at 756p, Tate & Lyle ahead 32.25p at 455p, Icap up 29p at 548p, and Imperial Tobacco ahead 99p at 2397p.

The biggest fallers were Northern Rock down 16p at 207.5p, Aviva off 16.5p at 719.5p, Rio Tinto down 65p at 4354p and BP off 7.5p at 619.5p.