Takeover speculation invigorates Footsie
A fresh burst of takeover and merger speculation in many of the London equity market's most important areas, notably telecoms and pharmaceuticals, helped British stocks make rapid progress yesterday.
Confirmation in the early afternoon that Vodafone, the cellular phones group, was holding merger discussions with AirTouch Communications of the US provided an added impetus.
Telecoms was the London market's best performing sector last year, on a mixture of takeover possibilities plus explosive growth in mobile phone usage. Telecom stocks occupied six out of the top 10 places in the FTSE 100 performance table yesterday, led by Telewest Communica- tions and Colt Telecom. Vodafone was the third best.
BT and Securicor, which control Cellnet, Britain's second biggest cellular phone company, were also prominent, as was Orange.
Pharmaceuticals were a close second in the 1998 performance table, with gains fuelled by the proposed Zeneca merger with Astra of Sweden and the unsuccessful merger talks between Glaxo Wellcome and SmithKline Beecham. Drug stocks shot up yesterday in the wake of reports that Glaxo Wellcome could well intervene in the proposed Zeneca/ Astra merger by launching a counter bid for the former.
Some dealers were beginning to get more optimistic about the chances of the Bank of England's monetary policy committee voting for another reduction in British interest rates when its two-day meeting finishes tomorrow. An announcement on rates will be made at noon.
At the close, the FTSE 100 was 78.8 higher at 5,958.2, having been 100 points ahead at its best shortly after the announcement of the Vodafone/AirTouch merger talks and as Wall Street made rapid early progress. But just as it looked set to challenge the 6,000 mark, the Footsie ran into pockets of profit-taking.
The other FTSE indices also perked up after a rather sluggish start. The FTSE 250 closed 19.2 higher at 4,870.2 and was lifted by strong performances by property stocks which were being pushed by Credit Suisse First Boston, the stockbroker. The FTSE SmallCap, meanwhile, extended its good showing, moving up another 6.9 to 2,089.7.
Turnover was a healthy 963 million shares with Footsie accounting for over 54 per cent of the total.