Smurfit Kappa approach boosts FTSE 100 while Just Eat sinks

By Julien Ponthus and Helen Reid

LONDON (Reuters) - A takeover approach for Irish packaging group Smurfit Kappa by U.S.-based International Paper lifted shares in the whole sector on Tuesday, providing a boost to Britain's top share index.

The FTSE 100 ended up 0.4 percent, outperforming European markets, as world stocks shrugged off fears of a trade war and concerns about political risk in Italy following its inconclusive general election.

The Irish listed shares of Smurfit Kappa, Europe's largest producer of paper-based packaging, jumped 18.3 percent to 33.86 euros after the company said the proposal from International Paper failed to reflect its growth prospects and the industry's attractive outlook..

Its London-listed shares closed up 19.6 percent, their biggest ever one-day jump.

"We believe an offer above 33 euros per share would be realistic" to start discussions between both groups, Jefferies said in a note. It also noted a "positive M&A read" to packaging peers DS Smith and Mondi.

The two groups, listed in London, rose 5.6 and 2.3 percent respectively and were among the session's top gainers.

Testing company Intertek Group also gained, closing up 4.6 percent after its results.

However, Just Eat spooked investors by announcing an extra 50 million pounds of investments to stay ahead of food delivery rivals. Its shares sank 12.6 percent, their worst day in nearly three years.

"If we were honest we did not expect a figure for total investment for 2018 to the magnitude of 50 million pounds," Berenberg analysts said.

The sharp market reaction reflected "shock and concern that the move may in fact represent an admission that competition is intensifying for Just Eat", said Hargreaves Lansdown senior analyst Laith Khalaf.

Another loser was industrial equipment rental company Ashtead Group whose shares were down 5.5 percent after it released third quarter results.

Meanwhile shares in Tesco gained 3.4 percent after data from market researcher Kantar Worldpanel showed it was jointly the fastest growing of Britain's big four supermarket groups alongside Morrisons.

Broad-based strength in mining and energy stocks supported the FTSE 100 as commodity prices firmed.

The FTSE 250 gained 0.6 percent but some mid-cap stocks suffered falls after publishing results.

Rotork shares tumbled 7.6 percent after the industrial machinery firm's earnings disappointed. The world's largest temporary power provider Aggreko also fell 3.9 percent after results.

(Editing by Peter Graff and David Stamp)