(Updating with further details)
LONDON (Thomson Financial) - Leading shares ended firmer, at their highest close since September 2000, as strength in heavyweight pharmas and oil stocks added to M&A-inspired gains in confectionary giant Cadbury Schweppes, dealers said.
By the close, the FTSE 100 index was up 46.0 points at 6,462, further lifted by a solid showing on Wall Street, and mirroring the positive wider market sentiment.
Final volume was fair, with 2.9 bln shares changing hands in 472,150 deals.
Meanwhile, Wall Street steadied in in early trade as solid results from bellwether General Electric helped temper mixed economic data.
A slide in consumer confidence heightened investor concerns about the economy but the government's wholesale inflation report eased some fears of higher interest rates.
By London's close, the DJIA was 18.80 points firmer at 12,571.80.
Back in London, shares in pharmaceuticals helped to underpin blue chip gains after US peer Merck & Co raised its full-year guidance last night by as much as 7 pct.
In response, SEB Enskilda said it views this as an indication that the pricing environment in key drug markets is better than originally assumed in company guidance.
AstraZeneca was the top riser, 69 pence higher at 2,820 and GlaxoSmithKline rose 34 at 1,467 in response.
Oil stocks also lent support as crude prices moved higher supported by refinery problems and falling gasoline inventories in the US ahead of the US driving season.
Earlier this afternoon, London Brent crude for May delivery was up 70 cents at 69.42 usd a barrel, while New York crude for May delivery was up 40 cents at 64.25 usd.
BP took on 13 at 576, Royal Dutch Shell rallied 39 at 1,737 and BG Group added 11 at 737-1/2.
On the M&A front, Cadbury Schweppes jumped 11 to 678, on news shares in Canadian drinks company Cott Corp have been suspended in the US and Toronto.
This morning the Wall Street Journal reported that Cott is talking with private-equity firms about joining its operations with Cadbury's beverage arm.
Cadbury's drinks business is expected to be valued at as much as 8 bln stg, when it is separated from Cadbury's candy brands this summer.
J Sainsbury was also in demand, 11-1/2 ahead at 534 after property tycoon Robert Tchenguiz confirmed in an interview with The Daily Telegraph he wants the group's board to realise value from its portfolio of 750 supermarkets.
Tchenguiz was also critical of Sainsbury's board for not putting the CVC offer to shareholders and denied he had been supportive of the Sainsbury family's opposition to the bid.
Still on the high street, Alliance Boots added 9 at 1,059 on a report in Retail Week that Guy Hand's Terra Firma and Wellcome Trust are keen to team up with KKR and Pessina to bid for beauty and drugs retailer.
In financials, Barclays gained 5-1/2 at 743-1/2 on talk the UK bank is to scrap merger talks with Dutch rival ABN Amro, and will itself shortly receive an 850 pence per share takeover offer from JP Morgan of the US.
But, banking industry sources played down the prospect of a JP Morgan bid, saying: 'This deal would seem unlikely bearing in mind the strength of JP Morgan's debt business.'
Barclays has long been mooted as a takeover target for Bank of America.
And being a quiet Friday, market rumours returned that Diageo is mulling a bid for Scottish & Newcastle, although traders were sceptical and said it is more likely investors are trying to cover their losses.
S&N shares added 2 at 588, while Diageo slipped 8-1/2 at 1,034-1/2.
Still on the downside, Imperial Tobacco fell 29 to 2,262 after the Financial Times reported that buyout group CVC is now in advanced stages of forming a powerful financial consortium to trump the UK tobacco group's 12.3 bln stg bid for Altadis.
Peer British American Tobacco slipped in sympathy, down 2 at 1,592.
Elsewhere, miners fell into the red, as the recent rally in commodity prices appeared to run out of steam somewhat.
Xstrata was down 29 at 2,766, BHP eased 7 at 1,152, Anglo American lost 1 at 2,740, Rio Tinto eased 14 at 3,115 and Vedanta Resources was down 4 at 1,397.
US exposed stocks were also under pressure on the back of further weakness in the dollar, with Rolls Royce off 7-1/4 at 490-3/4, Experian down 7 at 589 and ICAP off 4 at 521-3/4.
On the second tier, apart from mid-cap oil companies' gains, buyers came for retailer Woolworths, 1 firmer at 31-1/4, as takeover speculation citing Icelandic retail investor Baugur again did the rounds.
On the downside, Bunzl was 8 lower at 727-1/2 on the back of a Credit Suisse downgrade to 'neutral' from 'outperform'.
However, the broker increased the price target to 710 pence from 700 following the stock's strong rebound after a reassuring set of full-year 2006 results. tf.TFN-Europe_newsdesk@thomson.com tfn-lon-rn/tc COPYRIGHT Copyright AFX News Limited 2007. 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.
© 2007 AFX News
