(Updating with full report)
LONDON (AFX) - Leading shares closed just off session highs today, led by a firm banking sector on talks of a bid for Alliance & Leicester, while continued strength across mining stocks and a bullish morning on Wall Street gave the FTSE some late momentum, dealers said.
The FTSE 100 closed 54.8 points higher at 6,091.7, just off its session peak of 6,093.1, achieved 5 minutes earlier. The broader indices were also firmer, with the FTSE 250 jumping 151.30 points to 10,107.90.
Volume was above par, with 2.9 bln shares changing hands in 330,480 deals.
US stocks powered higher on Wall Street, as slower-than-anticipated April jobs growth bolstered hopes the Fed may no longer need to continue raising interest rates, dealers said.
The DJIA jumped 112.90 points to 11,551.80, while the Nasdaq added 16.91 points to 2,340.81.
Back in London, Alliance & Leicester jumped 78 pence higher to close at 1,200 pence on reports Spanish peer Banco Santander Central Hispano is in 'exclusive talks' to acquire the UK mortgage lender in a deal reputed to be worth more than 6.5 bln stg.
The report in this morning's City AM claimed Alliance & Leicester is thought to have indicated to potential suitors that it would accept an offer of around 6.7 bln stg, or 1,500 pence per share.
Brokers were sceptical however, with WestLB and Merrill Lynch both reiterating their 'sell' recommendations.
WestLB said that although it sees the commercial logic in such a deal, the price seems to be excessive and cautioned that as the only real synergies would be cost-related, Santander would be buying into a strategically very weak business.
The news lifted the rest of the sector, with perennial banking bid targets Lloyds TSB adding 5-1/2 to 536-1/2, Northern Rock climbing 15 pence to 1,115 and Bradford & Bingley moving 19-1/4 higher to 518-1/4.
Elsewhere, mining issues were in demand again as copper and gold futures continued higher, with the latter surging to fresh highs.
Antofagasta rose 88 pence to 2,543, Anglo American gained 76 to 2,476, Xstrata pushed 107 ahead to 2,254, and BHP rose 28-1/2 to 1,197.
In broker comment, 3i Group was another good gainer, up 42 pence to 936, after Merrill Lynch added the venture capitalist group to its Europe 1 list, saying the shares appeared undervalued at current levels.
Elsewhere, Cable & Wireles gained 1-1/4 pence to 102-1/4 on reports that mobile operator O2 was eyeing its Bulldog broadband division.
This morning, the Independent said the mobile phone operator, now owned by Spain's Telefonica SA, is understood to have C&W's Bulldog division and Tiscali's UK broadband business in its sights.
Vodafone was also in demand, up 2-1/2 pence to 127-1/4 after Citigroup reiterated its 'buy' advice in a preview of the mobile phone giant's upcoming strategic review.
Talk that the UK mobile giant is looking to seize control in Vivendi's SFR also did the rounds, as did renewed rumours of its Verizon Wireless stake disposal.
On the downside, ICI dropped 4 pence to 390-1/4 on profit-taking after yesterday's post-results rally, while recent disappointing numbers from US household goods group Procter & Gamble weighed on Reckitt Benckiser, down 24 pence to 1,957.
On the second line, Computacenter gained 18-1/4 pence to 264 after the computer services provider issued a reassuring trading update and pushed forward plans to return 75 mln stg to shareholders.
This morning the group revealed that trading strengthened in the latter part of March, producing a satisfactory overall first-quarter result.
However, Greene King was the top performer, up 74-1/2 pence to 826-1/2 as Merrill Lynch upgraded the shares to 'buy' from 'neutral' and woke investors up to the group's takeover attractions.
But in contrast, peer Mitchells & Butler slumped 16-1/2 at 477 as investors fretted that property tycoon Robert Tchinguez will be able to table a bid before Monday's 'put up or shut up' deadline.
Also on the downside, Matalan fell 3 pence to 187-1/2 as brokers remained downbeat following the troubled retailer's recent 30 pct slump in full-year profits.
In response, Credit Suisse cut its price target on Matalan to 105 pence from 140 as it reiterated its 'underweight' stance.
In a note to clients, the broker said it is now predicting further pretax profit falls to 40 mln stg in 2007/08 with EPS of around 7 pence.
Isoft was also weaker again, losing a further 10-1/2 to 100-1/4 after ABN Amro became the latest broker to downgrade the stock following last week's profit warning.
The Dutch broker cut its recommendation to 'sell' from 'hold', with a reduced target of 90 pence. newsdesk@afxnews.com gl/hjp COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
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