London stocks were still firmly in the black by midday on Monday, having been hit hard last week amid concerns about China’s tech crackdown, with deal news helping to lift sentiment.
The FTSE 100 was 1% firmer at 7,100.28.
CMC Markets analyst Michael Hewson said: “Last week Asia markets saw big declines due to a regulatory crackdown in China, with the Nikkei more or less trading near to its lows this year and the Hang Seng trading at a nine-month low.
“The extent of the falls appeared to prompt a partial backtrack, or softening of tone by the Chinese authorities prompting a little bit of a rebound which appears to have continued today in Asia.”
In equity markets, shares in FTSE 250 defence and aerospace engineer Meggitt rocketed as it agreed to be bought by US rival Parker-Hannifin for £6.3bn. Under the terms of the deal, Meggitt shareholders will receive 800p per share, which is a premium of around 70.5% to the closing share price on Friday.
On the top-flight index, GKN owner Melrose and engine maker Rolls-Royce also rallied.
Elsewhere, fund administrator Sanne rose sharply after saying it was in advanced talks with Apex Group about a possible takeover.
Russ Mould, investment director at AJ Bell, said: “UK stocks have long been considered cheap and this year’s M&A spree shows that overseas investors have finally got enough confidence to pounce on opportunities after years of showing little interest in the market.
“With a 6% gain, the top FTSE 100 riser was Melrose Industries on positive read-across from Meggitt given it also has interests in the aerospace and defence sector, having bought GKN in 2018. It would be interesting to see if this predator becomes prey, as Melrose has historically been the one doing the bidding.
“The FTSE 250 hit a new record high of 23,305 as its cohort of mid-cap stocks is seen to be better hunting ground for takeover targets than the large cap FTSE 100 index. Existing FTSE 250 bid target Sanne received an offer from private equity group Apex at 920p per share, having previously been subject to 830p, 850p and 875p per share offers from Cinven.
“We’ve seen quite a few private equity suitors having to raise their offers this year as companies and shareholders push back on initial approaches, saying they are too low. Private equity firms have a reputation for trying to get a bargain, but their tactics have been fully exposed this year and it now seems rare for the first offer to be the winning one.”
HSBC was off earlier highs but still on the front foot after the bank said it would reinstate dividends as first-half profits more than doubled as an ongoing restructuring and pivot to Asia continues to pay off.
SSE was trading up after agreeing to sell its entire 33.3% stake in gas distribution operator Scotia Gas Networks (SGN) for £1.23bn in cash.
Volution advanced after saying it had bought Energy Recovery Industries, a maker and supplier of low-carbon, energy efficient heat exchanger cells, for an initial €23.4m.
Market Movers
FTSE 100 (UKX) 7,100.28 0.97%
FTSE 250 (MCX) 23,282.85 1.46%
techMARK (TASX) 4,606.76 2.89%
FTSE 100 – Risers
Melrose Industries (MRO) 169.95p 6.15%
Anglo American (AAL) 3,350.00p 5.00%
JD Sports Fashion (JD.) 930.00p 3.68%
Rolls-Royce Holdings (RR.) 103.06p 3.36%
International Consolidated Airlines Group SA (CDI) (IAG) 173.32p 3.11%
ITV (ITV) 115.15p 2.63%
Land Securities Group (LAND) 727.60p 2.54%
M&G (MNG) 231.00p 2.48%
St James’s Place (STJ) 1,625.50p 2.43%
Next (NXT) 8,072.00p 2.41%
FTSE 100 – Fallers
Pearson (PSON) 834.60p -4.00%
Fresnillo (FRES) 806.00p -1.49%
Smith & Nephew (SN.) 1,440.50p -1.47%
Unilever (ULVR) 4,119.00p -0.77%
Polymetal International (POLY) 1,554.50p -0.54%
Relx plc (REL) 2,106.00p -0.38%
AstraZeneca (AZN) 8,237.00p -0.37%
Severn Trent (SVT) 2,790.00p -0.36%
Rentokil Initial (RTO) 565.00p -0.32%
Bunzl (BNZL) 2,658.00p -0.30%
FTSE 250 – Risers
Meggitt (MGGT) 734.00p 56.47%
Sanne Group (SNN) 911.00p 7.94%
Tullow Oil (TLW) 47.75p 6.49%
Cineworld Group (CINE) 67.14p 5.63%
Moonpig Group (MOON) 390.00p 4.61%
FirstGroup (FGP) 86.15p 3.92%
Essentra (ESNT) 294.50p 3.88%
Chemring Group (CHG) 318.50p 3.58%
Capital & Counties Properties (CAPC) 176.80p 3.57%
Cairn Energy (CNE) 132.20p 3.52%
FTSE 250 – Fallers
Convatec Group (CTEC) 225.70p -4.73%
TUI AG Reg Shs (DI) (TUI) 330.90p -2.42%
Spire Healthcare Group (SPI) 219.00p -1.35%
Airtel Africa (AAF) 88.10p -1.29%
Liontrust Asset Management (LIO) 2,075.00p -0.95%
IMI (IMI) 1,740.00p -0.91%
Wickes Group (WIX) 248.40p -0.80%
Centamin (DI) (CEY) 106.25p -0.75%
Apax Global Alpha Limited (APAX) 203.50p -0.73%
Diversified Energy Company (DEC) 104.80p -0.57%
