BRITAIN’S FTSE 100 rose yesterday, as a recovery in emerging market-exposed stocks and gains in Burberry, driven by bid speculation, kept the index near all-time highs.
The blue-chip index .FTSE closed up 1.1 per cent at 7,015.36 points. It hit a record high of 7,065.08 in March.
With just weeks to go before the 7 May General Election that looks too close to call, UK stock markets have so far shown few signs of political jitters.
A pick-up in mergers and acquisitions activity including Royal Dutch Shell’s proposed takeover of BG Group has leant support. BG Group shares rose 0.61 per cent, while Royal Duth Shell’s A and B shares were up 1.08 per cent and 0.62 per cent respectively.
Burberry shares were up 2.8 per cent, with traders citing market speculation of bid interest from US private equity. Burberry declined to comment.
“I have been buying up Burberry shares, but I don’t think I’ll go back in for more ahead of Burberry’s [results] numbers later this month,” Securequity sales trader Jawaid Afsar said.
Improving sentiment towards emerging markets helped asset managers including Ashmore and Aberdeen Asset Management, both up around four per cent, and HSBC, which was up 2.9 per cent.
The FTSE 100 was little changed after the Bank of England kept interest rates at record lows as policymakers wait to see whether a tumble in inflation is short-lived or turns into a bigger threat for the UK economy.
Temporary power provider Aggreko lost ground as violence escalates in Yemen, where the company has exposure. It fell 3.26 per cent to 1,543p.
Investors in other markets have shifted bets ahead of the election, for which opinion polls put the Conservatives neck-and-neck with the opposition Labour party.
Bets on how volatile the British pound will be over the next month rose sharply yesterday, driving the cost of taking out insurance against sharp swings in the currency to multi-year highs.
Some traders said the backdrop of takeover activity would cushion the FTSE from any major hits caused by the General Election.
“The M&A activity should keep the FTSE steady. The momentum is still to the upside,” Thames Capital Markets strategist Nav Banwait said.