London open: FTSE edges up; Direct Line surges after rejecting Aviva bid

London stocks edged up in early trade on Thursday, with Direct Line powering ahead after it rejected another takeover proposal, but trade was set to be quiet as US markets will be closed for the Thanksgiving holiday.

At 0825 GMT, the FTSE 100 was 0.2% firmer at 8,287.93.

Investors were mulling a survey which showed that UK consumer confidence remained largely unchanged following the Budget, weighed down by ongoing concerns about the strength of the economy.

According to the latest consumer sentiment monitor from the British Retail Consortium, expectations for personal finances over the next three months improved slightly, ticking up to -3 in November from -4 in October.

People also expected to spend more on retail over the next three months, with the measure rising to 3 from 2.

However, expectations for the wider economy weakened, easing two points to -19, while personal spending overall was unchanged at 17.

Helen Dickinson, chief executive of the BRC, said: "There was little shift in consumer confidence since the Budget, with many worried about the economy in the lead up to Christmas.

"While there was a very slight improvement in people’s expectations of their personal financial situation, this was offset by declining expectations of the wider economy.

"The last month clearly did little to shift the dial for households, either positively or negatively."

Christmas is a crucial time for most retailers as consumer spending traditionally rises notably over the so-called golden quarter.

In equity markets, Direct Line surged more than 35% after it said late on Wednesday that it had rejected a £3.3bn takeover proposal from Aviva.

Aviva offered 112.5p per share in cash and 0.282 new Aviva share, valuing the group at 250p per share. This is a 59.7% premium to the closing Direct Line share price on 18 November, which was the day before the proposal was submitted.

Direct Line dismissed the offer as "highly opportunistic", saying that it "substantially undervalued the company".

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: "Direct Line is playing hard to get, again, as the board rejects a tentative takeover offer from Aviva on the grounds that the 250p per share on the table significantly undervalues the company.

"It's not a clean offer; the 250p would be split half as cash and half as Aviva shares, which always makes things a little more complicated. Direct Line is no stranger to takeover offers, having rejected multiple attempts from Belgian insurer Ageas earlier in the year.

"There's a case to be made that Aviva is a better suiter, given it already shares markets with Direct Line in the UK, but it'll need to up its game - and its offer - if it wants Direct Line to take the proposal seriously."

Admiral gained 3.4%, while Aviva was the worst performer on the top-flight index.

Spirax-Sarco shot to the top of the FTSE 100 after an upgrade to ‘outperform’ at BNP Paribas Exane and an initiation at ‘buy’ at Citi, which also started Smiths Group at ‘buy’ and Halma at ‘neutral’.

Sainsbury’s and Tesco were also high risers after double upgrades at JPMorgan Cazenove to ‘overweight’ from ‘underweight’.

Troubled footwear maker Dr Martens rallied as it said it swung to a loss for the half year but that trading since the start of the autumn/winter season had been "encouraging", and held guidance for the 2025 fiscal year.

Pre-tax losses came in at £28.7m for the six months to September, compared with a £25.8m profit a year earlier. Revenue fell 18% to £324.6m.

On the downside, Imperial Brands, United Utilities, Severn Trent, Land Securities, 3i Group and Ithaca Energy all lost ground as they traded without entitlement to the dividend.

Tullow Oil fell sharply as it said it was on track to meet full-year production guidance but that free cash flow would be below previous guidance due to timing of payments.

Energean was also in the red even as it hailed "strong" third-quarter trading, with improved earnings and a jump in production, but also said full-year total production from continuing operations would be below previous guidance.

Food producer Cranswick was hit by downgrade to ‘sector perform’ from ‘outperform’ at RBC Capital Markets.

Market Movers

FTSE 100 (UKX) 8,287.93 0.16%
FTSE 250 (MCX) 20,672.97 0.35%
techMARK (TASX) 4,707.40 0.27%

FTSE 100 - Risers

Spirax Group (SPX) 7,140.00p 3.48%
Sainsbury (J) (SBRY) 260.40p 2.76%
Tesco (TSCO) 365.20p 2.04%
Admiral Group (ADM) 2,510.00p 1.87%
easyJet (EZJ) 547.20p 1.67%
SSE (SSE) 1,774.50p 1.31%
Airtel Africa (AAF) 106.10p 1.05%
Frasers Group (FRAS) 760.00p 1.00%
Entain (ENT) 791.00p 1.00%
AstraZeneca (AZN) 10,632.00p 0.95%

FTSE 100 - Fallers

Aviva (AV.) 476.30p -2.66%
Imperial Brands (IMB) 2,568.00p -2.54%
United Utilities Group (UU.) 1,119.00p -1.41%
Severn Trent (SVT) 2,714.00p -1.38%
Land Securities Group (LAND) 613.50p -1.37%
British American Tobacco (BATS) 2,991.00p -0.63%
Whitbread (WTB) 2,827.00p -0.56%
Fresnillo (FRES) 632.00p -0.47%
3i Group (III) 3,658.00p -0.44%
Flutter Entertainment (DI) (FLTR) 21,560.00p -0.42%

FTSE 250 - Risers

Wetherspoon (J.D.) (JDW) 656.50p 4.79%
Bridgepoint Group (Reg S) (BPT) 358.20p 4.74%
Pets at Home Group (PETS) 237.80p 3.39%
TI Fluid Systems (TIFS) 185.00p 3.35%
Ashmore Group (ASHM) 179.00p 2.40%
Vesuvius (VSVS) 418.50p 2.32%
Travis Perkins (TPK) 794.50p 2.32%
Safestore Holdings (SAFE) 774.50p 2.31%
Aston Martin Lagonda Global Holdings (AML) 104.30p 2.25%
Hilton Food Group (HFG) 920.00p 2.22%

FTSE 250 - Fallers

Ithaca Energy (ITH) 108.00p -10.15%
Discoverie Group (DSCV) 602.00p -4.60%
Foresight Group Holdings Limited NPV (FSG) 439.00p -2.44%
Clarkson (CKN) 3,840.00p -2.29%
PZ Cussons (PZC) 78.30p -1.88%
Fidelity Emerging Markets Limited Ptg NPV (FEML) 665.00p -1.77%
Cranswick (CWK) 4,915.00p -1.50%
Energean (ENOG) 1,082.00p -1.19%
Assura (AGR) 39.00p -0.96%
Target Healthcare Reit Ltd (THRL) 84.30p -0.94%