Reuters: Shell, BG lead FTSE to 3-wk high as M&A talk swirls: “Shell climbed 2.5 percent as dealers said a research note from UBS triggered speculation it could launch a full takeover [nL07710054] for Woodside, <WPL.AX> the Australian firm valued at more than $13 billion that it was blocked from buying in 2001 but in which it still holds a 34 percent stake.” (ShellNews.net) 7 April 05
By Steve Slater
LONDON, April 7 (Reuters) - Oil giant Shell <SHEL.L> helped Britain's top shares rally to a three-week high on Thursday on talk that it could make a major Australian purchase, although further setbacks for drugs stocks and retailer Boots <BOOT.L> held gains in check.
Shell climbed 2.5 percent as dealers said a research note from UBS triggered speculation it could launch a full takeover [nL07710054] for Woodside, <WPL.AX> the Australian firm valued at more than $13 billion that it was blocked from buying in 2001 but in which it still holds a 34 percent stake.
A dealer said a move for Woodside would be well received as it would boost Shell's reserves and show the company is putting last year's problems further behind it.
BG <BG.L> also benefited from talk of consolidation in the oil industry, with suggestions it could be a target driving its shares 2.6 percent higher. Firm oil prices also helped the sector add 15 points to the FTSE.
The FTSE 100 <.FTSE> share index closed up 29.6 points, or 0.6 percent, at 4,977.0, as a steady start on Wall Street helped drive the UK index to 4,984.5 in late action, its best intraday level since March 16.
But drugs stocks missed out on the rally due to a setback for two drugs from U.S. giant Pfizer, reigniting concerns about a tougher regulatory climate [nL07664988] for new medicines. GlaxoSmithKline <GSK.L> fell 0.9 percent as it has a product similar to one that Pfizer was asked to withdraw, while Shire Pharmaceuticals <SHP.L> shed 1.4 percent as Lehman Brothers repeated its "underweight" stance on the stock.
Midday news that interest rates were left on hold by the UK's Monetary Policy Committee (MPC) for the eighth month was widely expected.
"It's fairly clear the MPC is playing wait-and-see in order to evaluate further data," said Philip Shaw, chief economist at Investec. He said next month's decision could be a close call but rates should stay on hold. "We think rates will remain at 4.75 (percent) for the remainder of this year and we may see an interest rate cut in the first half of next year," he said.
CORUS GALVANISED
Steel firm Corus <CS.L> topped the FTSE leaderboard with a 2.8 percent rise on the back of positive comments about metal and steel demand from U.S. aluminium company Alcoa and Mittal Steel.
BHP <BLT.L> led a firm mining sector after Dresdner upgraded the stock [nWLB1422] to "buy". The bank also lifted its mining sector stance to "overweight", saying: "We are pushing out an estimated cyclical peak in commodity prices to early 2006 and believe high prices are sustainable over the medium term".
Advertising group WPP <WPP.L> rose 2 percent after CSFB upgraded its stance on the company to "outperform" from "neutral".
But retailer Boots <BOOT.L> endured a choppy day after it warned that its retail profits would fall [nL0658790] this year but unveiled plans to sell its Healthcare products business. Its shares rose as much as 2.5 percent as the restructuring spurred speculation of a possible takeover bid for the rest of the chain, but it reversed in the afternoon to end down 0.7 percent.
"If they did sell healthcare it would make what's left far more palatable for someone to come in, especially a private equity firm, although I'm not sure it's an area I'd want to be in now," one dealer said, noting competition from Tesco <TSCO.L> and others appears to be stiffening.
Talk that medical devices firm Smith & Nephew <SN.L> could attract a takeover helped its shares add 1.8 percent, but Tate & Lyle <TATE.L> was the worst performing blue-chip with a 2.8 percent drop, as dealers said this week's profit warning from Corn Products, a U.S. rival supplier of syrup used to sweeten soft drinks, had accelerated Tate's pullback after a strong recent run.
Water and gas utility East Surrey <ESH.L> led mid-caps with a 10 percent rally after unveiling it was in talks which could lead to a takeover offer worth around 453 million pounds.
ENDS
Additional reporting by Friedel Rother, Louise Heavens and Keiron Henderson
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