* FTSE 100 up 0.6 percent
* Miners rally as gold above $1,000 an ounce
* Investors welcome return of M&A activity
By Simon Falush
LONDON, Sept 8 (Reuters) - Britain's top share index rose to
its highest level in 11 months on Tuesday, boosted by
manufacturing data, the prospect of a revival in takeover
activity and a rise in mining stocks on the back of the higher
gold price.
By 1045 GMT the FTSE 100 <> was up 27.96 points, or 0.6
percent, at 4,961.14, after reaching an 11-month high of
4,971.99.
Prices built on Monday's advance, when the FTSE 100 closed
at 4,933.18, spurred by strong gains in confectionery group
Cadbury <CBRY.L> which rejected a $16.7 billion bid from North
America's biggest food group Kraft Foods <KFT.N>.
Miners added the most points to the index, enjoying a rally
against a backdrop of rising metals prices, with gold jumping
through the psychological $1,000 an ounce mark to its highest
level since February, boosted by a weak dollar and investors
looking for a hedge against inflation. []
Gold miner Randgold Resources <RRS.L> gained 3.3 percent,
while Kazakhmys <KAZ.L>, Rio Tinto <RIO.L>, Vedanta Resources
<VED.L> and Lonmin <LMI.L> rose 3.2-5.5 percent.
Along with expectations that merger activity might prompt
further sharp gains in equities after the Cadbury news, economic
data reinforced a view that the domestic UK economy is emerging
from recession.
British manufacturing output rose at its fastest monthly
rate in 1-1/2 years in July, with factory output rising 0.9
percent, three times faster than analysts had expected which
helped push up sterling <GBP=> as well as supporting stocks.
[]
"The solid manufacturing data have given markets a bit of a
lift, it tells us that de-stocking phase is coming to an end and
that restocking has possibly started," said Peter Dixon,
economist at Commerzbank.
MIXED BAG
Not all the economic news was positive. A survey by the
British Retail Consortium showed UK retail sales fell on the
year last month for the first time since May as cost-conscious
consumers refrained from splashing out on non-essential items.
[]
However, investors sought to accentuate the positive and
along with miners, energy stocks also motored higher.
The sector was supported as the price of crude oil <CLc1>
rose more than 2 percent to beyond $69 a barrel, underpinned by
comments by delegates from an OPEC meeting starting on
Wednesday, which analysts say may see more rhetoric on
compliance but no change in output targets.
Heavyweights BG Group <BG.L> and BP <BP.L> put on 2.1
percent and 0.2 percent, respectively.
Cadbury rose 1.7 percent amid hopes Kraft might have to
raise its offer by up to 40 percent after shares in the world's
second biggest confectionary maker increased by almost half on
Monday on news of the approach. []
Cazenove analysts said Nestle might make a counterbid for
Cadbury, perhaps in a joint approach with U.S. chocolate group
Hershey Co <HSY.N>. Nestle's chief executive Paul Bulcke
declined to comment directly on Monday. He said the company had
no major acquisitions planned although it was always open to
opportunities. []
Heavyweight Vodafone <VOD.L> was a major boon for the index,
up 2.2 percent, with traders citing relief that it was not
involved in expansion in the UK market after Deutsche Telekom
<DTEGn.DE> and France Telecom <FTE.PA> said they are in launched
exclusive talks to merge their British mobile units.
It was a mixed picture among life insurers. Friends
Provident <FP.L> and Standard Life <SL.L> added 0.6 percent and
0.2 percent respectively, though Aviva <AV.L> shed 1.9 percent.
Defensive stocks were broadly out of favour, with cigarette
maker British American Tobacco <BATS.L> off 0.2 percent and
spirits group Diageo <DGE.L> down 0.1 percent.
(Editing by Greg Mahlich)
