LONDON (Alliance News) - Stocks in London opened higher Wednesday, boosted by dovish comments from US Federal Reserve Chair Janet Yellen, while Premier Foods leapt higher after receiving an improved takeover offer from US spices and flavourings group McCormick & Co.
McCormick offered 65.00 pence per share, valuing Premier Foods at GBP536.7 million. The stock closed Tuesday in London at 56.50p for a GBP476.0 million market capitalisation. Early Wednesday, Premier Foods was up 8.9% to 61.50p for a market cap of GBP516.84 million.
The new cash offer comes after Premier Foods, the maker of Mr Kipling cakes and Bisto gravy, had rejected two previous bids from McCormick ahead of a key shareholder, Warburg Pincus, selling a 17% stake to Japanese noodle maker Nissin Foods Co Ltd instead.
McCormick on Wednesday called on Premier Foods to engage with the offer, arguing it provides shareholders with the opportunity of a cash exit from their holdings at a full valuation of the company.
The FTSE 100 index was up 1.3%, or 80.66 points, to 6,186.56. The FTSE 250 was up 1.0% at 16,928.75 and the AIM All-Share was up 0.3% at 710.30.
Stocks were boosted after Yellen poured cold water over the prospects of an April US interest hike.
In prepared remarks on Tuesday after the London stock market close, Yellen said she considers it appropriate for the Fed to proceed cautiously in adjusting monetary policy given the risks to the economic outlook. The Fed chief said the caution is especially warranted because the central bank's ability to use conventional monetary policy to respond to economic disturbances is limited with interest rates still at such low levels.
The speech largely offset recent speculation that the Fed will raise interest rates at its next meeting, after Yellen's colleagues struck a more hawkish tone in their respective speeches last week.
European equities also were lifted by Yellen's remarks. The CAC 40 in Paris was up 1.1% and the DAX 30 in Frankfurt was up 0.9%
In Asia Wednesday, the Japanese Nikkei 225 index closed down 1.3%, while the Shanghai Composite ended up 2.8%. The Hang Seng in Hong Kong traded up 1.5%.
Supporting the FTSE 100 were resource stocks rebounding from Tuesday's losses. Multi-commodity miner Anglo American was the best performer in the blue-chip index, up 7.8%, while peer Glencore was up 4.7% and oil and gas giant BP was up 2.5%.
The stocks tracked commodity prices, which moved higher as the dollar fell. The price of gold was notably higher, trading at USD1,240.16 an ounce just after the open Wednesday, compared to USD1,225.74 at the London stock market close on Tuesday.
In the FTSE 250, Saga was one of the best performers, up 2.3%, after it said it signed a quota share agreement for motor policies underwritten by its AICL unit.
The company, which provides products and services for over-50s, said the quota share deal with NewRe, a subsidiary of German reinsurer Munich Re, will cover 75% of the risk of motor policies underwritten by AICL since February 1.
The initial agreement is for three years, with the option to extend for another three years. Saga said the deal will significantly reduce its underwriting risk and will lead to a phased withdrawal of capital from its underwriter.
Homewares retailer Dunelm Group was the worst mid-cap performer, down 2.7%, after it was cut to Hold from Buy by Jefferies. The US bank also cut retailer Marks & Spencer Group and department store operator Debenhams to Hold from Buy sending the stocks down 1.4% and 2.2%, respectively.
Still ahead in the economic calendar, eurozone consumer confidence and business climate surveys are released at 1000 BST, and US MBA mortgage applications are at 1200 BST. Later in the afternoon are German inflation figures at 1300 BST and US ADP employment change at 1315 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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