(Updates with full report)
LONDON (Thomson Financial) - Leading UK shares closed strongly up, shrugging off Wall Street's loss of earlier gains, with Scottish & Newcastle having surged on a bid approach.
At the close, the FTSE 100 index was up 63.4 points at 6,677.7 having traded between a high of 6,690.5 and a low of 6,594.9. The FTSE 250 index closed 171.8 higher at 11,538.0
Volume was average, with 3.08 bln shares having changed hands in 641,423 deals.
On Wall Street, US stocks gave up earlier gains. Sentiment was boosted after strong results from Yahoo and Intel after the close yesterday, and JP Morgan Chase and Coca-Cola also beating expectations with their third quarter results, before the market opened today. But economic data was less encouraging.
Claire Collingwood, trader at CMC Markets, said: '(UK) buyers came in after yesterday's weakness in the FTSE, and were partly driven by takeover speculation. US earnings, with more still to come out in the next few days, are still very much the focus for the market there.'
US inflation coming in above expectations. The Consumer Price index was up 2.8 pct in the year to September, the fastest rate since March.
Data on housing starts for September, showed a 10.2 pct decline to 1.191 mln, the lowest level since 1993, was also disappointing.
The Dow Jones Industrial Average was up 14 points at 13,927 as the London markets were closing. It had been up 99.9 points two minutes into the session. Back in London, Scottish & Newcastle topped the leaderboard, closing up 119-1/2 pence at 756, boosting its value to more than 7 bln stg, after Denmark's Carlsberg and The Netherlands' Heineken confirmed that they were in talks about launching a joint cash bid for their UK peer.
Scottish & Newcastle said the proposed break-up bid is unsolicited and unwelcome. It urged shareholders to take no action at this time and said a further announcement will be made if appropriate.
Under the deal terms, Carlsberg will ultimately acquire Scottish & Newcastle's interest in Baltic Beverage Holdings, France and Greece whilst Heineken will assume control of its business in the UK and other European markets.
Dealers were hearing a bid of anywhere between 750-800 pence per share.
Elsewhere, Tate & Lyle rose 32-1/4, or 7.6 pct, to close at at 455 as analysts noted the implications of a report that the EU is likely to approve the import of four genetically modified crops at a meeting on October 24.
Panmure Gordon said this is a potential positive for Tate & Lyle and reiterated its 'hold' stance and price target of 415 pence.
Barratt Developments closed 18 pence higher, at 694, after ABN Amro upgraded the group to 'hold' from 'sell'. The broker said that following significant share price weakness, the valuation was looking fairer with a 2008 price to earning ratio of 6.6.
Cadbury Schweppes rose 12 pence to close at 617-1/2, with ABN Amro raising its target price to 580 pence, from 550. ABN Amro said the strong 3Q sales growth suggests confectionery will exceed the broker's profit expectations this year, though this will be offset by a weaker beverages performance. It maintained its 'hold' rating.
In the financial sector, Royal Bank of Scotland closed 17-1/2 pence higher at 532, following comments from Lehman Brothers that the market has still to incorporate the value-creation potential from the acquisition of certain ABN assets.
Lehman has re-started its coverage of Banco Santander SA with an 'overweight' stance, following the Royal Bank of Scotland Group-led consortium's acquisition of ABN Amro.
Its peer Alliance & Leicester was up 8-1/2 points at 783-1/2 on rehashed bid talk with Credit Agricole again mooted as being interested and HBOS was up 12 pence at 878.
Shire added 32 to end the day at 1,203, after the FDA advisory panel opened the door for expanded use of the company's hyperphosphatemia Fosrenol product.
Enterprise Inns rose 5 pence to 617-1/2 and peer Punch Taverns closed 14 higher at 1,038 after Lehman Brokers initiated coverage on the two stocks with an 'overweight' stance and an 800 pence and 1,400 target price respectively.
Tullow Oil closed at yet another high, 638 pence, up 14 pence, benefiting from oil prices reaching fresh highs in the US although the Energy Information Administration said in its weekly report that inventory levels had risen more than expected. The prospect of Turkey attacking Kurdish rebels in Iraq more than offset this.
WTI for November traded at more than 89 usd a brrel at one point. Brent crude for December was recently trading above 84 usd a barrel.
Only 16 FTSE 100 shares ended in negative territory, and only three fell more than 1 pct.
This included oil giant BP, down 7-1/2 pence at 619-1/2 after a strong run recently.
Some miners continued yesterday's declines. Investors were unimpressed by production news from Rio Tinto.
The world's third-largest mining group fell 65 pence to 4,354, after unveiling an update showing a 6 pct fall in Q3 copper production.
Anglo American was 10 pence lower at 3,310. Others recovered from morning losses, with BHP Billiton up 34 at 1,857.
Landsbanki said that Rio Tinto's operating results for the third quarter of 2007 show that the company's mines are continuing to operate at full capacity, though as usual individual operations were hit by operating problems, mostly external.
Elsewhere, Credit Suisse said that it was taking its mining weightings down to 7 pct overweight from 20 pct overweight because miners are no longer cheap.
In property, Liberty International was 5 pence off at 1,113, after Goldman Sachs downgraded the group to 'sell' from 'neutral' and reduced its target to 905 pence from 1,308.
Likewise, British Land was 8 pence lower at 1,073, suffering from both SG Securities initiating with a 'sell' and going ex-dividend.
On the second line, trading updates provided the main focus.
DS Smith was a major gainer, closing 15-3/4 ahead at 216, after it said its overall trading performance in the first half of 2007/08 had been good, adding it is confident that the company will make substantial progress this year.
The international packing and office products maker said it expects higher pre-exceptional pretax profit of 50 mln stg for the first-half to end-Oct compared with 29 mln stg previously.
Soft drinks group Britvic was 22-1/4 higher at 340, after issuing a confident trading update in which it said its full-year profit would meet current market expectations.
In reaction to the update, Altium Securities said the year has provided insight as to how fast the soft drinks market can change. Altium retained its 'hold' rating and target of 300 pence for the time being.
An in-line update was enough to push shares in Spirent Communications 2-1/2 higher to 63-3/4. The company said its third-quarter trading results were in line with its expectations for both revenues and operating profit and that it expects results for the second half as a whole to meet its estimates.
Bradford & Bingley rose 9-1/4 pence to close at 263-3/4 after Numis Securities upped its stance on the group to 'add' from 'sell', but lowered its target price for the UK mortgage bank to 284 pence from 320 pence.
But Cattles, an earlier casualty, closed up 3-1/2 at 356-1/2. Earlier, Numis reiterated its 'reduce' rating in the subprime lender and cut its target to 301 pence from 320.
In UK macroeconomic news, the Bank of England's rate-setting body voted 8-1 to keep its benchmark interest rate unchanged at 5.75 pct at its last meeting on October 4, with arch-dove David Blanchflower alone in voting for an immediate quarter point cut. brian.gorman@thomson.com btg/lam COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
© 2007 AFX News
