May 30, 2007

US consumer confidence and takeover speculation boost FTSE

British Airways shares were on the front foot today as it became the latest company to find itself at the centre of takeover speculation.

The UK flag carrier rose nearly 5%, or 21.5p, to 482.5p, after it emerged that Goldman Sachs had raised its stake in the company from less than 3% to 5.14%, sparking rumours the investment bank may be engineering a takeover attempt.

Overall, the FTSE 100 Index closed up 36 points at 6606.5, as better-than-expected US consumer confidence data also helped add momentum to the market.

Annual results from mobile phone giant Vodafone saw the stock rise by 8.3p to 159.7p, a gain of more than 5%, as investors reacted positively to an 11.4% dividend hike. The news helped offset a slight dip in underlying annual profits and warnings of continued challenging conditions in Europe.

Broadcaster BSkyB also made a strong advance – closing up 20.5p at 660.5p - after a broker upgrade from UBS. The positive note came after UBS commissioned a survey of the pay-TV market, which revealed 20% of non-pay homes plan to subscribe to pay-TV in the future. UBS lifted its long-term forecasts for Sky’s share of the market from 55% to 60%.

Moving in the opposite direction, pharmaceuticals giant GlaxoSmithKline topped the fallers’ board with a 2% loss after a report revealed that doctors in the US have shunned its diabetes drug Avandia since a study last week suggested it increased the risk of heart attacks in patients by 43%. Glaxo has rejected the findings, but shares fell another 28p to 1306p.

Shares in Royal Bank of Scotland dipped 1%, or 5p, to 637.5p, as its consortium unveiled a £48.2 billion plan to counterbid for Dutch bank ABN Amro. The decline reflected the higher-than-expected cash element of the bid proposal.

In the second tier, Dairy Crest suffered share losses after announcing the recall of its Clover spread due to mould being found in the product.

Shares fell by more than 3%, or 24p, to 677p as the firm said it would face a £1 million excess for the insurance claim, although it stressed costs would be covered by the policy.

Elsewhere, beleaguered NHS software provider iSoft saw shares plummet 15%, or 7.75p, to 43p on news that its sale to Australia’s IBA Health could be blocked by iSoft partner CSC, which has said it opposes the £132.2 million deal.

Shares in Channel Tunnel operator Eurotunnel, meanwhile, soared 56%, or 14p to 39p, as investors moved to build stakes in the firm following the resolution of its financial crisis after shareholders backed proposals for a debt-for-equity swap to wipe out much of its £6.2 billion debts on Friday.

The biggest Footsie risers were Vodafone ahead 8.3p at 159.7p, British Airways up 21.5p at 482.5p, BSkyB ahead 20.5p at 660.5p and Mitchells & Butlers up 27.5p at 892p.

The biggest Footsie fallers were GlaxoSmithKline down 28p at 1306p, British Land down 20p at 1400p, Vedanta Resources off 21p at 1469p and BG Group down 10p at 764.5p.

Source: The Post.IE The Sunday Bussiness Post Online

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