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London markets recover as takeover talk boosts trading

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The FTSE closed higher on Tuesday (Kirsty O’Connor/PA) (PA Archive)
The FTSE closed higher on Tuesday (Kirsty O’Connor/PA) (PA Archive)

The London markets rebounded on Tuesday as merger and acquisition activity helped to improve sentiment among traders.

Ladbrokes owner Entain particularly helped to keep trading buoyant later in the session, as it confirmed it received a multibillion-pound takeover approach from US rival DraftKings.

The FTSE 100 firm jumped by 345.5p, or 18%, to 2,261p amid speculation the deal could be around 20 billion dollars (£14.6 billion), although the size had not been confirmed.

London’s top flight closed 77.07 points, or 1.12%, higher at 6,980.98 on Tuesday.

Danni Hewson, AJ Bell financial analyst, said: “After a manic Monday comes another turnaround Tuesday.

“Whilst investors are still clearly nervous about the countdown to a potential Evergrande default they’ve been happy to jump on some rebound action today or embrace potential new seams of opportunity.”

She added: “Though London’s blue-chip index has still failed to claw its way back above that all important 7,000 mark today has delivered some confidence boosters including news that the Government has struck a deal to get production back under way at two fertiliser plants.”

Europe’s other key markets also made strong rebounds after trading in Asia calmed.

The German Dax increased by 1.43% and the French Cac moved 1.5% higher.

In the US, there was a similar broad improvement in sentiment, as it was also aided by a jump in Uber’s value after it said it could turn a profit in the third quarter.

Meanwhile, sterling made gains against a dollar which continued its retreat amid caution ahead of Wednesday’s important Fed meeting.

The pound was up 0.15% versus the US dollar at 1.366 and was 0.15% higher against the euro at 1.154.

In company news, National Express was the strongest performer in the FTSE 250 after it unveiled plans for a potential all-share takeover of rival Stagecoach.

The possible merger deal would form a transport giant of which National Express would own around 75% and Stagecoach around 25%.

Shares in National Express lifted by 17p to 240p while Stagecoach moved 18.35p higher to 86.4p.

B&Q owner Kingfisher drifted lower despite hiking its full-year sales and earnings outlook due to the pandemic-fuelled DIY boom.

Shareholders had expected a strong performance and company caution over product availability, shipping and logistics challenges, and cost price inflation took the shine off its positive profit guidance.

Shares in the company slipped back 18.1p to 349.9p as a result.

Pershing Square lifted higher after the listed fund was boosted by the successful stock market float of Universal Music in Amsterdam.

It closed 130p higher at 2,725p on Tuesday.

The price of oil nudged higher against the weaker dollar while concern that Opec+ might not pump enough oil in the event of a significant demand pick up helped put a floor under prices.

Brent crude increased by 0.43% to 74.24 dollars per barrel.

The biggest risers on the FTSE 100 were Entain, up 345.5p at 2,261p, Pershing Square, up 130p at 2,725p, Royal Dutch Shell B, up 54p at 1,484.6p, and Royal Dutch Shell A, up 52.2p at 1,489p.

The biggest fallers of the day were Kingfisher, down 18.1p at 349.9p, Compass Group, down 33p at 1,453p, Antofagasta, down 25.5p at 1,329p, and Lloyds Group, down 0.67p at 42.475p.

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