London open: M&A hopes boost UK stocks as BG Group soars on Shell takeover

A takeover offer for BG Group and hopes for more M&A activity were giving UK stocks a big lift on Wednesday morning, with the FTSE 100 retesting the key 7,000 level.

BG Group had soared by nearly 40% in early deals after oil major Shell offered £47bn in cash and shares for the natural gas outfit, sparking speculation that further industry consolidation will soon follow.

Accendo Markets senior trader Marc Kimsey said "we're just getting started" with M&A in the oil sector. "The decline in oil price over the past year has battered some stocks which are clearly now looking attractive," he said.

Meanwhile, press reports were also highlighting the possibility of an approach by French media giant Vivendi for Sky and a Google takeover of Twitter.

The Footsie was trading 0.45% higher at 6,993.15, extending gains after a 1.9% surge the previous session. The index has not closed above the 7,000 level since 24 March.

Aside from corporate newsflow and M&A rumours, the focus of Wednesday's session is likely to be on the Federal Reserve which releases minutes from its policy meeting on 17-18th March at 18:00.

"Any hawkish comments on rates will likely be tempered by Friday's weak payroll numbers so the minutes are a little behind the curve but interesting nevertheless," said analysts at Deutsche Bank.

The release of Alcoa's first-quarter results later on also marks the unofficial start of quarterly earnings season in the States.

Oil stocks rise on M&A hopes

BG Group was the standout riser of the morning in London, up 38.5% after its board recommended a takeover offer from Shell, though shares in the latter dipped into the red. The bid values BG at around 1,350p per share, a 50% premium to its closing price of 910.4p on Tuesday. If the transaction completes, BG Group shareholders will be left with a 19% stake in the enlarged group.

Others in the sector were making gains on hopes that the deal will spark a new round of industry M&A. BP, BHP Billiton, Ophir Energy, Tullow Oil, Premier Oil and Soco International were all on the rise.

Sky was in demand amid bid speculation that France’s media giant Vivendi could table a bid for the UK listed TV and broadband operator. Though Vivendi representatives denied Sky is an acquisition, market participants piled into Sky stock on an earlier Reuters report citing sources, that Vivendi could pay up to £28bn for the company.

Vodafone shares were pulling back slightly. The stock advanced on Tuesday after UBS highlighted the possibility of a bid for the telecoms group from US cable operator Liberty Global.

Mining stocks were making decent gains early on, including Rio Tinto, Anglo American and Antofagasta.

Leading the fallers were insurers Friends Life, Aviva and Prudential.

Market Movers
techMARK 3,201.63 +0.04%
FTSE 100 6,993.15 +0.45%
FTSE 250 17,580.25 +0.34%

FTSE 100 - Risers
BG Group (BG.) 1,260.50p +38.46%
BP (BP.) 473.90p +4.19%
Sky (SKY) 1,060.00p +3.62%
Experian (EXPN) 1,179.00p +2.52%
Anglo American (AAL) 1,037.50p +1.17%
Aberdeen Asset Management (ADN) 470.80p +1.16%
Aggreko (AGK) 1,606.00p +0.94%
Intertek Group (ITRK) 2,624.00p +0.92%
Mondi (MNDI) 1,362.00p +0.89%
Centrica (CNA) 261.50p +0.77%

FTSE 100 - Fallers
Friends Life Group Limited (FLG) 405.40p -5.81%
Royal Dutch Shell 'B' (RDSB) 2,100.00p -4.91%
Aviva (AV.) 548.00p -2.32%
Royal Dutch Shell 'A' (RDSA) 2,047.00p -2.24%
Barratt Developments (BDEV) 523.50p -1.32%
Wolseley (WOS) 3,989.00p -1.24%
Hikma Pharmaceuticals (HIK) 2,193.00p -1.22%
Associated British Foods (ABF) 2,928.00p -1.21%
Persimmon (PSN) 1,661.00p -1.19%
TUI AG Reg Shs (DI) (TUI) 1,216.00p -1.14%

FTSE 250 - Risers
Tullow Oil (TLW) 332.40p +10.69%
Ophir Energy (OPHR) 160.40p +10.16%
Go-Ahead Group (GOG) 2,546.00p +4.82%
Premier Oil (PMO) 157.90p +4.71%
Soco International (SIA) 180.30p +4.46%
Fidelity China Special Situations (FCSS) 159.00p +4.33%
Lonmin (LMI) 124.00p +2.48%
Vedanta Resources (VED) 521.50p +2.46%
Michael Page International (MPI) 544.00p +2.45%
Hays (HAS) 161.20p +2.28%

FTSE 250 - Fallers
JD Sports Fashion (JD.) 470.00p -2.06%
Acacia Mining (ACA) 276.60p -1.71%
National Express Group (NEX) 289.00p -1.53%
Dignity (DTY) 1,907.00p -1.45%
Bellway (BWY) 1,964.00p -1.26%
Provident Financial (PFG) 2,769.00p -1.25%
Millennium & Copthorne Hotels (MLC) 581.50p -1.19%
Berkeley Group Holdings (The) (BKG) 2,645.00p -1.16%
Infinis Energy (INFI) 180.00p -0.94%
Riverstone Energy Limited (RSE) 1,050.00p -0.94%