Britain's FTSE 100 rose for an eighth straight trading day on Tuesday, as earnings hopes lifted Tullow Oil and bid talk boosted Reckitt Benckiser. Tullow , up 3.8 percent, said it expected to post record first-half revenues as it ramped up output in Ghana and also said it was a few weeks away from completing a key deal in Uganda.
It was a good day all round for oil explorers as small cap peers, led by Xcite Energy up 16.6 percent, pushed higher after Britain's Treasury said it will increase the level of tax support for North Sea oil companies to help firms operating in smaller, less profitable oil fields. Cenkos Securities said the move was significant to "undo the disastrous budget announcement", which imposed a sharp hike in the supplementary charge on North Sea oil and gas production.
London's blue chip index closed 6.49 points or 0.1 percent higher at 6,024.03, its highest closing level since May 3 and taking its gains over the last 8 days to 6.2 percent, driven by hopes Greece would avoid defaulting on its debts. Reckitt Benckiser climbed 2.6 percent, extending recent gains on media reports that US consumer goods peer Procter & Gamble (P&G) is circling the company.
Blue chip engineer IMI rose 4.2 percent in heavy volumes, with traders citing vague bid talk. Panmure analyst Oliver Wynne-James said the stock is undervalued and investors were buying up stock on the hope it may become a bid target. "Only companies of a certain size could (fund a deal for IMI)," he said.
Take-over talk lifted shares in FTSE 250 firm Yule Catto , up 4.8 percent, with Dow Chemical mentioned as a possible bidder for the British specialty chemical company at around 350-375 pence per share. Broker comment sparked investor interest in a number of stocks, with high street retailer Marks & Spencer up 2.5 percent as Matrix upgraded its recommendation to "buy".
Fund manager Schroders rose 1.0 percent as UBS lifted it rating on the company to "buy", while Man Group added 1.8 percent ahead of an update on July 7. It wasn't such a good session for Primark-owner Associated British Foods, which shed 0.7 percent after dutch food group CSM NV issued a profit warning.
Intertek Group, however, was the top FTSE faller, down 2.7 percent as Societe Generale downgraded its rating for the testing equipment firm to "hold" from "buy", citing the effects of high wage inflation in China and signs of the Chinese economy slowing. Miners weighed on the FTSE 100 after speculation in the Chinese press that there could be an interest rate hike soon prompted investors to bank recent profits.
Banks were a major weight on the index with investors locking in recent gains as doubts lingered as to how the Greek austerity package would impact British banks. "Is the knock-on effect of Greek problems factored into our own austerity plan?," said Colin McLean, managing director of SVM Asset Management, which has around 650 million pounds under management.
"Banks share prices reflect the fears. Banks remain exposed to problem loans, particularly to the UK mortgage market and commercial property. Investors need to assess carefully any investments in banks and insurers." A flat opening in the US after its Independence Day holiday, despite economic data pointing to underlying strength in manufacturing, also helped cap gains on Britain FTSE 100.