FTSE 100 Watch: Footsie Nears Six-Year High

on May 14, 2013

The FTSE 100 was in positive territory in early afternoon trading on Tuesday, May 14, standing at 6,652.26 or 0.31 percent above Monday’s closing level and near a six-year high. The Footsie has received support from strong gains in the utilities sector and well-received results from Babcock International and ICAP.

**Severn Trent’s** share price rose more than 14 percent to ₤20.95 on Tuesday after the water company announced a takeover approach from a consortium led by the Kuwait Investment Authority and Canada’s Borealis. Earlier reports in Financial News had suggested the bidders would be prepared to offer between ₤22.50 and ₤23 a share. Utilitity companies are generally considered to be defensive stocks because of their steady income stream and stable regulatory environment but Liberum Capital analyst Peter Atherton has warned that a bid in year three of the five-years regulatory cycle would carry significant risk for the bidder. The news of the Severn Trent takeover approach lifted shares in rival **United Utilities** by 3.65 percent to ₤7.6650 and **Pennon Group** by 5.18 percent to ₤7.00.

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**Lonmin’s** share price fell by 6.64 percent to ₤2.67 after the mining company announced it was halting operations at its Marikana mine in South Africa. **Anglo American** and **Kazakhmys** both declined by more than 2.5 percent as copper prices fell for the first time in three days. Barclays reduced **Rio Tinto’s** shares rating to equal weight from overweight, sending the stock 1.88 percent lower to ₤29.445. **Vedanta Resources** was also lowered to equal weight and its stock lost 2.34 percent to ₤12.50.

“The long-term story for the mining companies is still there,” Richard Hunter, head of equities at Hargreaves London, said on Tuesday as quoted by Bloomberg. “In the short term, discontent about the way the companies have been run, along with intrinsic links to commodity prices and speculative investors has made the sector quote volatile.”
**Babcock International Group** was one of the big winners on Tuesday, with the share climbing by more than six percent to ₤11.59. The surge came after the engineering support-services firm reported a rise in fiscal full-year pre-tax profit and said it expected strong progress this year.

**TUI Travel** fell by 1.37 percent to ₤3.4720 after J.P. Morgan Cazenove cut the holiday firm stock’s rating to neutral from overweight. Meanwhile, **BG Group’s** shares advanced by 2.66 percent to ₤12.17 on the back of an announced shift of focus to exploration and liquefied natural gas, while cutting back spending on big developments.
!m[Mining Stocks’ Losses Fail to Offset Broad Gains in The Blue-Chip Index](/uploads/story/2260/thumbs/pic1_inline.png)

Shares in brokerage firm **ICAP** rallied on Tuesday, gaining 13.05 percent to ₤33.67 after the company posted a bigger full-year profit than it had indicated and reported improved April performance on the back of increased trading activity.
**Betfair’s** share price fell 3.13 percent to ₤8.67 after the online betting operator rejected a ₤9.50-per-share offer from a consortium led by private equity firm CVC Capital Partners. Betfairs said the bid undervalued the business while CVC said it could not reach an agreement with Betfair’s board on the financial terms and “as a result has no intention of making an offer.”
**The FTSE 100 was at 6,662.99 as of 14.05.2013, 02.40 GMT.**


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