Takeover chatter boosts London market

Merger and acquisition speculation has helped to spark the markets again in a deathly quiet period for corporate reporting, with Sainsbury’s the latest retailer to soar in value.

The FTSE 100 firm climbed after reports that the UK’s secondlargest grocer was being examined as a potential takeover target by US private equity firm Apollo Global Management.

Both Sainsbury’s and Apollo have declined to comment on the Sunday Times report, but it has not stopped investors from getting excited.

Sainsbury’s has been boosted in recent weeks by the rising valuation of rival Morrisons, which agreed a £7 billion deal last week.

Now the stock, which was heavily shorted by traders earlier in the year, has reached a seven-year high.

It closed 45.3p higher at 340p.

Michael Hewson, chief market analyst at CMC Markets UK, said the FTSE 100 had a “positive day” on the back of the M&A chatter, as resource firms also had a strong session.

London’s top flight closed 21.12 points, or 0.3%, higher at 7,109.02 yesterday.

Elsewhere in Europe, sentiment was similarly positive, with French traders particularly upbeat about the economic recovery.

The German Dax increased by 0.28% and the French Cac moved 0.86% higher.

Wall Street opened where it left off on Friday to rise on the opening bell as the Nasdaq 100 hit another record high.

Sterling made gains despite disappointing PMI data as it benefited from a slump in the dollar, which continued its slide in value from Friday. The pound was up 0.05% versus the dollar at 1.372 and was 0.07% higher against the euro at 1.169.