Britain's top share index notched up a sixth consecutive win on Wednesday, boosted by further gains in the mining sector following record earnings from coupled with hopes for take-over activity as France's Saint-Gobain made a hostile bid for wallboard maker BPB.
The FTSE 100 index sealed a new 43-month high with a 4.8 point gain to 5,332.3. The benchmark had spent much of the session slightly lower as several large-cap companies, including Reuters, Kelda and BT, traded without the right to the latest dividend payout.
Taken as a whole, ex-dividend stocks took more than 11 points off the leading index. Jim McCafferty, head of research at stockbrokers Seymour Pierce, said a stream of positive earnings announcements, a pick-up in merger and acquisition activity plus cash returns to shareholders in the form of dividends continued to underpin the market.
"And with the market thinking about a potential rate cut, what do you do with one's money? Bonds are less and less attractive with interest rates going where they are so equities seem to be the place to be."
On Thursday the Bank of England is nearly certain to cut British interest rates for the first time in two years as policymakers seek to prevent an economic slowdown from deepening.
Market watchers said a cut would also provide some respite to Britain's struggling retailers, although many in the sector remained on the back foot, with Kingfisher, Marks & Spencer and Dixons all down by about one percent.
Investors continued to pile into the mining sectors, impelled by strong earnings from sector giant Rio Tinto. Shares in the world's second largest miner topped the list of blue chip gainers with a 3.7 percent advance, while Antofagasta rose 3.5 percent and BHP Billiton added 3.3 percent.
Overall the sector added around 8 points to the leading index.
Shares in BPB pared earlier losses to take their place among the top FTSE 100 gainers with a 3.7 percent rise to 734 pence after the plasterboard maker became the target of a hostile take-over bid by French glass maker Saint-Gobain.
BPB shares initially dipped amid investors' worries that Saint-Gobain could walk away following its three rebuffed negotiation attempts.
"I don't think 720 pence is going to be enough. If they can negotiate with the shareholders a price around 750 pence, that looks like it might do the job," said one analyst who declined to be named. "I also wouldn't be surprised if Saint-Gobain came back with a higher price."
Elsewhere in the sector, hopes for further consolidation helped building materials firm Hanson shake off an earlier fall triggered by a cautious outlook statement to notch up a 0.8 percent gain. The company has long been rumoured to be a potential take-over target for France's Lafarge, dealers said.
Among mid-caps, shares in Aegis surged to the top of the second-tier leader board, up 8.4 percent on talk that France's Havas will bid for the media buyer, although Aegis played down the speculation.
"There's no truth in it from our end. We know nothing of a bid," the Aegis spokesman said. Havas, the world's sixth-largest advertiser, said it did not comment on market speculation.
Shares in HBOS, the latest in a number of banks to report this week, nudged up 0.6 percent as profit rose 15 percent and the firm increased its planned share buyback for this year by one-third.
BSkyB shares lost 1.4 percent after full-year results and subscriber numbers grew but only in line with forecasts, while Cadbury Schweppes dipped 1.2 percent as Morgan Stanley took the firm off its European portfolio.
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