UK's top share index moves up

UK blue chips closed higher on Monday as yet more mergers and acquisitions talk boosted shares, with health and beauty retailer Boots and telecoms firm Cable & Wireless leading the way ahead.
Boots gained 4.3 percent on talk that private equity companies might be interested in the firm, striking while the cash-rich company works on plans to merge with Alliance Unichem. Some observers believe the plan could be tied up with regulators until the summer, leaving an opportunity for a predator to strike.
"There are rumours that private equity has approached Boots because they'll want to get hold of it before they merge with Alliance Unichem because they're sitting on a lot of cash," said Hilary Cook, Director of Investment Strategy at Barclays Stockbrokers.
Cable & Wireless rose 3.9 percent after market talk that the firm will withdraw its Bulldog broadband unit from the retail market in the face of intense competition. Dealers also cited media reports suggesting Thus could bid for C&W's UK operations.
C&W will update the market on strategy on February 28, a company spokesman said.
The FTSE 100 index closed 13.1 points up at 5,772.4, back from a session peak of 5,790.4 but within sight of last week's 4-1/2 year high of 5,816.0.
Market watchers believe the FTSE could flag in the near term as investors wait for developments in a batch of M&A rumours surrounding stocks ranging from food and household products firm Unilever to banking group Lloyds TSB.
"What we need now is some concrete activity on the M&A front, not just rumour. You want to see a bid for one of Unilever, Lloyds TSB, Cable & Wireless, Boots - preferably more than one - to keep this market going, because at the moment it's frothy due to take-over talk. An awful lot of previous underperformers are going up because of M&A talk," said Cook at Barclays Stockbrokers.
Longer term Cook said other fundamentals looked solid.
"The global economy is still pretty good. US unemployment down to 4.7 percent is very good. China's still looking bubbly. Unless it goes very pear-shaped on the global front, it doesn't look too bad," said Cook, referring to tension over Iran's nuclear plans.
Lloyds TSB continued its upward track, rising 0.9 percent. The shares were strong last week on talk BBVA might be interested in a bid and gained another lift on Monday on hopes the Spanish bank might look to expand in Britain after it was trumped in its bid for Italian lender BNL by France's BNP Paribas.
M&A talk supported Argos stores owner GUS, up 1.6 percent after the Sunday Times reported two private-equity firms could bid 6 billion pounds for its business-services arm Experian.
Not all bid situations brought share gains, however. Ports and ferries group P&O fell 2.2 percent after doubts grew over whether Singapore's PSA International would open a new front in the bidding war with Dubai Ports World for control of the UK firm.
A person familiar with the situation told Reuters PSA was expected to decide by the end of this week on its next move. Singapore's Business Times reported that PSA could be close to "throwing in the towel".
Also on the downside, Cairn Energy fell 3.1 percent after Merrill Lynch cut its rating on the stock to "neutral", and bank Northern Rock slipped 2 percent after Deutsche Bank cut its investment rating to "hold".
"Given Northern Rock's strong long-term growth prospects, we believe that it should trade at a significant premium to the UK domestic banks, (but) ... with an expected lack of positive catalysts in the short term, we expect a period of consolidation," Deutsche analysts wrote in a research note that stated a preference for Lloyds TSB and Barclays.