Shares in Aberdeen jumped 14.7 per cent, the biggest daily gain in five years, after it bought SWIP, Lloyds Banking Group’s fund management arm, creating Europe’s biggest listed standalone fund manager.
“In an industry that is still ripe for consolidation it pays to be big,” said Alex Potter, equity research analyst at Mirabaud Securities, who expects rising profit expectations to lift the shares further in the coming months.
“Even aside from the 20 per cent (earnings increase) that almost mechanistically should flow through from the deal, consensus is well underpinned.”
Volume on Aberdeen stock was nearly four times its average for the past 90 days, Thomson Reuters data showed.
Shares in Lloyds, which has been trying to offload its non-core assets, advanced 1 per cent.
The broader FTSE 100 rose 30.02 points, or 0.5 per cent, to 6,723.46 points.
The index was further supported by bold Chinese reforms which could make the world’s second-largest economy healthier and more balanced in the coming years.
Beijing’s plans to find new sources of economic growth and shift to a consumer-led economy were expected to benefit companies that sell consumer goods to China, such as Burberry, which gained 1.2 per cent, and Unilever, up 1.1 per cent.
“They are very serious about the switch to consumption,” said Alastair Winter at Daniel Stewart. “The Burberrys of this world are laughing.”
But Winter cautioned that European investors would be waiting to see concrete action by Chinese authorities before taking a more bullish stance on the country.
That was highlighted by the relatively subdued reaction of the FTSE relative to Hong Kong shares, which rose by their biggest margin in two years.
Energy services firm Petrofac knocked 2.4 points off the FTSE after guiding for modest growth in 2013 and next year, raising questions over its ability to hit a key 2015 earnings target.
Petrofac’s shares fell 16.6 per cent, their steepest ever daily drop, in volume nearly seven times its daily average.