Footsie boosted by US rate news

13 April 2012

IT WAS game, set and match to the bulls as the

Footsie

Wall Street jumped 92 points within the first hour as traders reacted with relief to news of the earlier than expected transfer of sovereignty in Iraq.

A 1.1% jump in US consumer spending in May, the fastest increase since the rebound from the 9/11 terrorist attacks in 2001, fuelled demand in New York ahead of the tomorrow's crucial decision on interest rates. A 1/4% Fed rise to 1 1/4% has already been discounted but confirmation of dearer US money should tempt many fund managers from the sidelines.

However, they will probably not pop their head above the parapet until after Friday's US non-farm payroll report. After May's gain of 248,000 jobs, economists expect a 250,000 rise in June, a total that should be seen as a further positive recovery sign for markets. Fingers crossed.

Takeover bids and deals have thankfully kept things ticking over in recent months. Thomson Financial tells us that the value of worldwide mergers and acquisitions in the first half of the year reached £472m, compared to £342m for the same period last year. The US had its busiest six months since 2000, while the biggest deal in Europe was French drugs group Sanofi's £28bn bid for Aventis.

Hopes that corporate activity will show no signs of abating in the second half were lifted by a further speculative gain of 14 3/4p to 511 3/4p in mortgage bank Abbey National. Rumours remain rife that Banco Santander Central Hispano, Spain's biggest bank, is lining up a hostile offer. They both held abortive merger talks in March.

Insurance giant Prudential rose 10p to 473p on gossip it will soon sell its 79.3% stake in internet bank egg (1 3/4p up at 161p) to Capital One, the US credit card group, for £1.4bn.

British Airways advanced 6 1/4p to 272 1/2p. It was boosted by hopes of lower fuel costs following a sharp fall in the oil price below $37 a barrel as Iraq ramped up exports after mending sabotaged pipelines.

EMI was in tune at 241 1/4p, up 7 1/4p, amid revived hopes of a tie-up with Warner Music.

Telecoms operator Colt Telecom buzzed 2 1/4p higher to 81 1/4p as punters plugged into revived chatter that cash-rich Cable & Wireless ( 3/4p dearer at 128 1/2p) is lining up an offer. Orange mobile phone owner France Telecom has also been mentioned in the same breath as Colt recently.

Struggling support services group Jarvis slumped 6 1/4p to 75p. Renewed selling was sparked by talk of a pending fundraising operation. Jarvis recently announced it has delayed publication of its annual results to end-March from May to late July.

Nightclubs operator Luminar shed 8p to 412p as rumours of management changes and a profit warning continued to do the rounds. A Luminar spokesman last night categorically denied that there will be any statement before the AGM on July 6.

Speculation about an imminent drilling report lifted JKX Oil & Gas 5 1/4p to 123 3/4p.

Bema Gold sparkled at 162 1/2p, up 6p, after announcing additional highgrade drill results from its Kupol Property in Chukotka, north-east Russia.

Designer Vision, a supplier of in-car entertainment, edged up 1/2p to 12 1/2p. It has extended its existing supply agreement with BMW to provide rearseat entertainment systems for the BMW X5 model from August.

Manston Airport owner PlaneStation improved 1/4p to 6.55p after submitting a new planning application to the London Borough of Redbridge to build a London City Racecourse at Fairlop Waters, Barkingside.

Central African Gold gained 1/2p to 8 3/4p after being granted exploration rights over an extra 872km area in southern Botswana.

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