BID SPECULATION boosted media group Sky and utility Severn Trent, pushing the FTSE 100 equity index upwards yesterday, while hopes of a Greek debt deal lifted stock markets worldwide.
The blue-chip index rose 115.22 points, or 1.7 per cent, to 6,825.67 points at the close, its strongest daily gain since the results of the General Election in May.
Volatility on the FTSE, a crude measure of investor concern, was down nearly three points to hit a three-week low.
Sky was among the best-performing FTSE 100 stocks, rising 3.4 per cent after The Sunday Telegraph newspaper reported that the Murdoch family might be planning a new attempt to take full control of Sky.
The report said that Murdoch had rebuffed bids from Vodafone and Vivendi, and UBS said that Sky could be an attractive option for several buyers.
“We think the Telegraph report highlights the potential strategic value of Sky to a number of different parties and this is not reflected in the current share price,” analysts at UBS said in a note, giving the stock a “buy” rating.
“We remain fundamentally positive on Sky and believe investors have underestimated the upside to growth from new initiatives and the benefits of scale from the Sky Europe deal,” analysts added.
Severn Trent advanced six per cent, making it the top FTSE riser, after the Sunday Times reported that Canadian investment company Borealis Infrastructure was considering a bid, while small-cap chocolate firm Thorntons surged more than 40 per cent after Ferrero International made a bid.
Cruise operator Carnival rose 3.8 per cent to a two month high after Deutsche Bank lifted its rating on the stock to “buy” from “hold”.
Berenberg also published a positive note about the travel firm, stating that Carnival “remains at a discount to the market and is still set to see superior earnings growth going into 2017”.
Given previous instances of hopes for an easing of Greece’s debt crisis being thwarted, some traders remained cautious.
“I’d rather wait to see them sign on the dotted line on Greece and then buy into the market rather than buy into it right now,” said Hantec Markets analyst Richard Perry.