FTSE up almost 60 points

The FTSE 100 Index enjoyed a buoyant beginning to the week today with utility firms in the takeover spotlight.

Speculation over a bid for Northumbrian Water pushed up shares in the sector across the board, with Severn Trent and United Utilities adding 5% and 3% in the top flight.

The FTSE 100 Index overcame a difficult start to the session to finish 58.9 points higher at 5247.4 or 1.1% with US markets also showing early gains.

Wall Street was cheered by better than expected results from oil giant Exxon Mobil, and a rise in US consumer spending for the third month in a row.

Better than expected manufacturing news added to the mix in the UK as growth in activity reached a 15-year high in January, according to a closely-watched survey.

The pound fell as low as 1.58 against the dollar early on as nervous investors moved money out of commodities into the safe haven of the greenback, but clawed back above 1.59 later in the session. Sterling was little moved against the euro at 1.14.

The return of bid speculation in the water sector coincides with the removal of uncertainty caused by regulator Ofwat's review of prices for the next five years.

This process is coming to an end after all but one firm agreed to accept the recommendations.

Severn Trent shares rose 45p to 1170p and United Utilities added 15p to 551.5p. In the FTSE 250 Index, Northumbrian rose 30.4p to 289p or 12% although a trading update in the afternoon gave no hint of any takeover interest. Ontario Teachers' Pension Fund is the rumoured buyer.

Elsewhere in the top flight, British Airways cheered 6.8p to 213p after Ryanair raised its profits forecast and as reports suggested the European Union was moving closer to giving its approval for BA's three-way tie-up with American Airlines and Iberia.

Engineering and aerospace giant Rolls-Royce also made steady progress, adding 7.5p to 487.3p after Morgan Stanley and Royal Bank of Scotland both raised their target price on the company.

But fund management firm Schroders was the Footsie's top faller, losing 35p to 1211p or 3% after a downgrade from brokers at Credit Suisse.

It was joined on the fallers' board by engineering and project management firm Amec, which shed 6.5p to 751.5p or 1% despite news of an oil services deal off the coast of Brazil.

Footsie's oil and mining groups weighed early in the session as commodity prices fell, but BP later moved into positive territory after Exxon's figures boosted confidence ahead of annual results tomorrow. Shares added 7.7p to 594.6p as crude prices followed equity markets higher.

Mining firms were on the back foot for much of the session on lower metals prices, although they bounced back later as the dollar eased back against major currencies.

Vedanta Resources was the biggest gainer in the sector, surging 126p to 2553p after analysts spied upside in the price through the potential spin-off of subsidiaries.

The biggest Footsie risers were RBS up 2.56p at 34.86p, Vedanta Resources up 126p at 2553p, Kazakhmys up 62p at 1281p and Barclays up 11.65p at 282.2p.

The biggest Footsie fallers were Schroders down 35p at 1211p, Imperial Tobacco down 24p at 2002p, Experian off 7p at 591.5p and Amec down 6.5p at 751.5p.