Technology boost for FTSE

Materials technology firm Johnson Matthey led the London market higher today as bid rumours swirled around the blue-chip stock.

The platinum-to-catalytic convertors firm is said to be target of US giant Dow Chemical and gained more than 5% on hopes of an approach.

After quiet early trading the FTSE 100 Index gained some momentum late in the session despite downbeat economic news on both sides of the Atlantic, closing 61.1 points higher at 6345.6.

Traders shrugged off worse than expected UK borrowing figures earlier in the day and news that the country’s current account deficit rose sharply to a record £20 billion in the third quarter of the year.

In the US fears of a slowdown were fuelled when an indicator of future business activity fell to its lowest level in more than two years in November, which dragged the Dow Jones Industrial Average into the red.

Amid thin trading as markets wind down ahead of the Christmas break, broadcaster ITV was in focus after the Competition Commission recommended pay-TV firm BSkyB reduce its controversial 17.9% holding in the company to below 7.5%.

That revived hopes of bid interest in the commercial broadcaster, which lifted 1.4p to 84.4p, or nearly 2%. BSkyB however slipped into the red, falling 1%, or 7p, to 600p as traders faced up to the company making a hefty loss on its investment in ITV.

Financial stocks also made modest gains after a reduction in inter-bank lending rates in recent days. Royal Bank of Scotland moved 4.25p higher to 429.75p, while Barclays cheered 4p to 503p.

Risers elsewhere included interdealer broker Icap – a big beneficiary of soaring trading levels in the recent market turmoil – which gained 18.5p to 699p, while Currys owner DSG International edged 3.5p higher to 102.8p despite falling from favour in recent sessions.

Other retailers on the front foot included supermarkets Tesco and Morrisons, which also suffered reverses yesterday in fears over slower Christmas trading. The duo recouped some losses today, with Tesco 10p ahead at 471p, and Morrisons 7.75p up at 311p. Sainsbury’s meanwhile moved 4.25p higher to 429.75p.

Top flight newcomer Tullow Oil provided the biggest fall of the session, with shares off more than 3% after the exploration firm disappointed analysts with an update from a test well in Uganda. Shares dipped 20p to 630p.

Meanwhile, shares in Sports Direct International continued to rally after the publication of half-year results prompted a 20% gain yesterday.

Investors followed the lead of chief executive Dave Forsey and finance director Bob Mellors, as both directors spent £1m (€1.4m) on the company’s shares today. The FTSE 250 stock rose another 13%, or 13.25p to 114.25p.

There were contrasting fortunes for pubs and brewing group Marston’s, the leading faller in the second tier after a downgrade for the sector from JP Morgan amid consumer spending fears.

Marston’s was down nearly 3%, or 8.75p to 311p, while top-flight stock Mitchells & Butlers was 0.25p lower at 442.25p.

The biggest Footsie risers were Johnson Matthey up 93p at 1836p, British American Tobacco ahead 68p at 1980p, DSG International up 3.5p at 102.8p and Compass ahead 3.5p at 102.8p.

The biggest fallers were Tullow Oil down 20p at 630p, British Energy off 9.5p at 517p, Persimmon down 12.5p at 775.5p and Experian off 6.25p at 388.5p.