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(Alliance News) - Stocks in London ended higher on Monday, with the FTSE 250 at record-setting levels, as investors cheered merger and acquisition activity.
The FTSE 100 index closed up 49.42 points, or 0.7%, at 7,081.72. The FTSE 250 ended at record highs, up 259.84 points, or 1.1%, at 23,208.67. The AIM All-Share finished up 7.47 points, or 0.6%, at 1,258.58.
The Cboe UK 100 ended up 0.7% at 705.30, the Cboe UK 250 closed up 1.1% at 20,956.40, and the Cboe Small Companies ended down 0.1% at 15,229.70.
In Paris the CAC 40 ended up 1.0%, while the DAX 30 in Frankfurt ended up 0.2%.
"European markets have got off to a good start this week, after getting a decent handover from markets in Asia, pushing the Stoxx 600 to new record highs, along with the FTSE 250, which has been given a lift from more M&A activity, while the FTSE100 has edged up to 7,100 and a two week high," said CMC Markets analyst Michael Hewson.
In the FTSE 100, HSBC Holdings ended 0.3% lower. The global lender reported first-half profit more than doubled from the year before, with its Europe and US operations back in the black.
In the six months to June 30, the Asia-focused bank reported pretax profit of USD10.84 billion, leaping from USD4.32 billion a year before.
Helping to improve the bank's interim profit was a USD719 million credit release, swung from the mammoth USD6.86 billion provision set aside in the first half of 2020 in preparation for the economic effects of the pandemic to cause loans to not be repaid. Revenue, however, slipped 4.9% to USD25.55 billion in the recent six months from USD26.75 billion a year before. Net interest margin worsened to 1.21% from 1.43%.
In the FTSE 250, Meggitt ended the standout performer, up 57% at 735 pence with a GBP3.7 billion market value. The UK defence contractor accepted a GBP6.3 billion takeover offer from US motion and control technologies developer Parker-Hannifin.
Under the terms of the deal, the Cleveland, Ohio-based firm will pay 800p per share in cash for the FTSE 250 company, a 71% premium to Meggitt's closing price of 469.10p in London on Friday.
The deal brought read-across rallies across the aerospace and defence sectors. Melrose Industries, owner of GKN, ended the best blue-chip stock up 5.2%. Elsewhere, QinetiQ, Senior, Chemring and Babcock International closed up 2.3%, 9.3%, 1.6% and 2.9% respectively.
However, a US takeover of a UK company in a sensitive industry pertaining to national security threatens to be controversial. Meggitt and Parker-Hannifin have agreed to offer legally binding commitments to the UK government as part of the deal.
Those include ensuring that a majority of board members are UK nationals and maintaining Meggitt's UK head office and divisions under the name "Parker-Meggitt". They also plan on maintaining headcount levels in the UK, as well as research and development spending.
Still, Bloomberg reported the developments will be closely watched by UK Secretary of State for Business, Energy & Industrial Strategy Kwasi Kwarteng to ensure UK jobs remain protected.
Sanne Group ended up 7.6% after the fund administration business entered takeover talks with Apex Group, potentially sparking a bidding war with rival suitor Cinven.
Sanne said it is in advanced talks with financial services provider, Apex Group, over a possible cash buyout worth 920.00p per Sanne share.
FTSE 250-listed Sanne noted Apex's offer represents a 53% premium to Sanne's closing share price of 603p on May 13, the day before the commencement of the current offer period. With 162.2 million shares in issue, this offer would value Sanne at around GBP1.49 billion.
Last Wednesday, Sanne said it remained in takeover talks with private equity firm Cinven. The company entered talks with Cinven over a 875p offer in June, after rejecting a string of lower offers.
The pound was quoted at USD1.3900 at the London equities close, up slightly from USD1.3898 at the close Friday.
On the economic front, the UK manufacturing sector lost momentum last month due to staff shortages and supply chain issues.
IHS Markit/CIPS purchasing mangers' index posted 60.4 points in July, down from 63.9 in June and further off May's record high of 65.6.
Raw material, staff and skill shortages all put a cap on growth in July. Further jobs were added in July, but the rate of hiring was insufficient to prevent a further increase in backlogs.
The euro stood at USD1.1880 at the European equities close, up from USD1.1858 late Friday. Against the yen, the dollar was trading at JPY109.30, down from JPY109.74 late Friday.
Stocks in New York were higher at the London equities close amid optimism over government infrastructure spending.
The DJIA was up 0.4%, the S&P 500 index up 0.5% and the Nasdaq Composite up 0.4%.
US senators on Sunday finalised a historic, trillion-dollar infrastructure proposal that is expected to be approved within days, Democratic Senate leader Chuck Schumer said.
If passed by Congress and signed into law, the bill would pump historic levels of federal funding into fixing US roads, bridges and waterways, ensuring broadband internet for all Americans and expanding clean energy programs.
Brent oil was trading at USD73.58 a barrel at the equities close, down sharply from USD76.29 at the close Friday, amid rising concerns over the Delta variant of Covid-19 and disappointing economic data from China.
The Chinese manufacturing sector eked out some growth in July, but saw its weakest improvement for 15 months, as businesses battle with rising input and output prices, survey data from IHS Markit showed. The headline seasonally adjusted purchasing managers' index slipped to 50.3 points in July from 51.3 in June. This left it barely above the neutral 50.0 point mark.
"Oil prices have slipped more than 1% on Monday on the back of the weaker than expected Chinese PMI readings. A slowdown in the world's second largest economy would be a big blow for the region at a time when numerous countries are struggling to get to grips with the latest Covid wave," explained Oanda Markets analyst Craig Erlam.
Gold was quoted at USD1,814.25 an ounce at the London equities close, lower against USD1,821.81 late Friday.
The economic events calendar on Tuesday has the Reserve Bank of Australia's interest rate decision overnight and eurozone producer prices at 1000 BST.
The UK corporate events calendar on Tuesday has interim results from oil major BP, builders merchant Travis Perkins and from insurers Hiscox and Direct Line.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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