London midday: M&A propels stocks as Greek hopes rise ahead of EU summit

Rising hopes over a short-term funding deal for Greece lifted UK stock markets on Monday, with M&A activity providing a further fillip to shares.

The FTSE 100 was trading up 1.18% at 6,789.43 by midday, with blue chips Sky and Severn Trent rising strongly on speculation the companies could be bid targets.

Meanwhile, Spire Healthcare jumped on the FTSE 250 after a sector peer bought nearly a third of the company.

According to reports, Greece’s lenders are working on a deal to extend the country’s bailout by six months and supply up to €18bn in rescue funds. Meanwhile, news that the ECB has raised the emergency funding cap for Greek banks also eased fears sparked last week about a potential run on the country’s lenders.

“Even after all these years, a last-minute deal that, in reality, merely kicks the problems further into the year still has the power to inspire an equity market rally,” said IG analyst Chris Beauchamp.

After weeks of no progress in negotiations between Athens officials and international lenders, the deadlock was broken on Sunday night when the government submitted new proposals to the heads of the IMF, ECB and European Commission.

EC president Jean-Claude Juncker labelled the proposals as a “basis for progress”, while EU economic commissioner Pierre Moscovici said he was “convinced” that a deal would be made. “We are moving in the right direction, we have solid ground for a deal, we just have to consolidate that today,” Moscovici said.

However, others were more pessimistic, such as Finnish finance minister Alexander Stubb who said he had "very low expectations" that leaders will sign off on an agreement on Monday. Irish finance minster Michael Noonan also said ahead of the summit: "My expectation is that we will be meeting again on Thursday".

Nevertheless, markets were showing optimism with the yield on a 10-year Greek bond as much as 1.1 percentage points and two-year bond yields down over 3.1 percentage points. Meanwhile, stocks in Athens were up over 7%.

Sky, Severn Trent and Spire up on M&A

Sky was in demand on rumours that the Murdoch family may be considering a fresh attempt to take full control of the UK broadband and pay-TV operator, after it knocked back approaches for its stake in the company from Vodafone and French media giant Vivendi.

Shares in UK water company Severn Trent rose following a report in the Sunday Times suggesting that Canadian infrastructure investor Borealis was once again considering a bid for the company.

Hospital operator Spire Healthcare jumped on the news that Remgro, a major shareholder of sector peer Mediclinic, is to buy a 29.9% stake from Cinven for 360p per share, equal to £432m. Mediclinc and Remgro confirmed they do not intend to make a full takeover offer, though analysts at Investec said this was still a possibility in the future.

Cruise operator Carnival advanced after Deutsche Bank lifted the stock to ‘buy’, while HSBC gained on an upgrade to ‘buy’ at Investec.

Tullow Oil edged higher after settling a capital gains tax dispute with the government of Uganda and the Uganda Revenue Authority with regard to its farm-downs to CNOOC and Total in 2012.

Power generator hire firm Aggreko gained after revealing plans to restructure into two units as it announced a raft of management changes.

Market Movers
techMARK 3,182.92 +0.84%
FTSE 100 6,789.43 +1.18%
FTSE 250 17,798.50 +0.53%

FTSE 100 - Risers
Carnival (CCL) 3,301.00p +4.20%
Severn Trent (SVT) 2,136.00p +3.94%
Sky (SKY) 1,076.00p +3.66%
International Consolidated Airlines Group SA (CDI) (IAG) 522.00p +3.26%
Aberdeen Asset Management (ADN) 418.20p +2.75%
Whitbread (WTB) 5,280.00p +2.62%
Capita (CPI) 1,264.00p +2.60%
United Utilities Group (UU.) 975.50p +2.47%
Vodafone Group (VOD) 239.05p +2.31%
CRH (CRH) 1,899.00p +2.26%

FTSE 100 - Fallers
Randgold Resources Ltd. (RRS) 4,416.00p -1.82%
Fresnillo (FRES) 704.50p -1.12%
Anglo American (AAL) 976.10p -1.06%
Hikma Pharmaceuticals (HIK) 1,928.00p -0.98%
Weir Group (WEIR) 1,780.00p -0.61%
Antofagasta (ANTO) 709.50p -0.49%
Glencore (GLEN) 270.95p -0.22%

FTSE 250 - Risers
Spire Healthcare Group (SPI) 350.00p +9.38%
Man Group (EMG) 168.20p +3.70%
Balfour Beatty (BBY) 254.40p +3.63%
Hunting (HTG) 607.50p +2.88%
SIG (SHI) 204.30p +2.82%
Fidelity European Values (FEV) 180.30p +2.73%
Pennon Group (PNN) 842.50p +2.68%
Greggs (GRG) 1,181.00p +2.52%
Indivior (INDV) 234.60p +2.18%
Ophir Energy (OPHR) 117.40p +2.18%

FTSE 250 - Fallers
Allied Minds (ALM) 555.50p -3.89%
Saga (SAGA) 214.40p -3.21%
Riverstone Energy Limited (RSE) 1,000.00p -2.91%
Petra Diamonds Ltd.(DI) (PDL) 155.50p -1.95%
Centamin (DI) (CEY) 63.65p -1.85%
PayPoint (PAY) 1,021.00p -1.83%
Polymetal International (POLY) 546.00p -1.62%
Jimmy Choo (CHOO) 150.80p -1.44%
Polar Capital Technology Trust (PCT) 581.50p -1.44%
Shawbrook Group (SHAW) 373.00p -1.39%