BRITAIN’S FTSE 100 rose yesterday, boosted by signs of a strengthening global economy and major deals for pharma group Shire and telecoms group BT.
Shire rose to an all-time high after beating competitors to buy ViroPharma, in a $4.2bn deal implying a 64 per cent premium to the stock price of the US rare diseases specialist, compared with before the bid speculation started in September.
The hefty premium was seen as further evidence of a more bullish attitude by global firms, such as Verizon’s buyout of Vodafone from their US joint venture and Twitter’s initial public offering.
“Companies are looking at major acquisitions or initial public offerings because the market is right where they can generate some decent amount of money,” Danny Cox, head of financial planning at Hargreaves Lansdown, said.
“There’s the potential for some sort of Santa Rally as people feel a bit more confident,” Cox added, referring to a FTSE surge in the run up to Christmas.
The FTSE 100 closed up 19.95 points, or 0.3 per cent higher, at 6,728.37 points, inching closer to a five-month high of 6,819 hit last week.
The FTSE was extending an upward move started on Friday, when much better-than-expected jobs data fuelled expectations the world’s largest economy was picking up the pace.
Since then Chinese data has shown stronger than expected growth in factory output and solid growth in retail sales in the world’s second biggest economy.
General financial stocks, which are heavily exposed to the health of global markets, rose 1.7 per cent, with asset managers Schroders and Aberdeen Asset Management up 4.3 per cent and 3.4 per cent, respectively.
Yet some investors remained worried that the better US data would bring forward the time when the Federal Reserve starts trimming its asset-purchase programme, which has driven investors into equities in the past year.
The FTSE has rallied nearly 20 per cent since this round of quantitative easing (QE) was announced in September 2012.
The Fed is expected to start reducing bond purchases in early 2014.
BT helped the FTSE rise after it beat dominant pay-TV operator BSkyB to Champions League football rights in a £900m deal. Shares in BSkyB fell 10.9 per cent in their worst daily performance since 2008 while BT’s stock rose 0.5 per cent to 372p.