* FTSE 100 up 1.8 percent, bounces fron near 3-year low
* M&A, plan to shore up U.S. mortgage firms boost financials
* Broadcaster ITV up on Endemol bid speculation
By Michael Taylor
LONDON, July 14 (Reuters) - The FTSE 100 <> rose 1.8
percent on Monday as a combination of a U.S. plan to rescue
mortgage finance firms and merger and acquisition (M&A) activity
buoyed financials, while broadcaster ITV <ITV.L> led individual
gainers.
At 1054 GMT the UK's blue-chip index gained 95.32 points to
5,356.9, after falling 2.7 percent on Friday to its lowest
closing level in nearly three years.
Beaten-down banks and financials rose after the U.S.
Treasury and Federal Reserve announced a plan on Sunday evening
which called for sweeping measures to lend money and buy equity,
if necessary, in Freddie Mac and Fannie Mae. []
Alliance & Leicester <ALLL.L> soared nearly 50 percent after
Spain's Santander <SAN.MC> said it had reached a takeover deal
with the British bank.
Peers that benefited from the positive sentiment included
Standard Chartered <STAN.L>, Bradford & Bingley <BB.L>, Barclays
<BARC.L>, Lloyds TSB <LLOY.L> and HBOS <HBOS.L>, which were all
up between 2.6 and 13.7 percent.
But the FTSE 100 has fallen more than 17 percent this year
and many market participants doubted the sustainability of any
upturn.
"We saw this last week. It's too early to call any sort of
recovery," said Richard Hunter, head of UK equities at
Hargreaves Lansdown Stockbrokers. "It's almost a mini-relief
rally, as much as the Fed doing what they can to help Fannie and
Freddie so to speak."
"Certainly in terms of the UK and Europe, there are still
concerns on the banking front on whether there are more credit
writedowns to come," he added.
TOP GAINER
ITV <ITV.L> climbed 14.9 percent to top the FTSE 100
leaderboard after the Financial Times quoted the co-founder of
producer Endemol as saying a combination of the two companies
"could make sense, depending on the numbers".
ITV Executive Chairman Michael Grade has been approached by
"interested parties" over the possible sale of BSkyB's <BSY.L>
stake in the British free-to-air broadcaster, a source familiar
with the matter also told Reuters.
Among other individual shares, Rexam <REX.L> gained 7.2
percent to feature among leading FTSE 100 advancers, after
Goldman Sachs raised its rating to "buy" from "neutral" and
added the world's biggest drinks can maker to its pan-Europe buy
list.
Further on the upside, shares in Diageo <DGE.L> and
SABMiller <SAB.L> rose between 1.9 and 2.5 percent after U.S.
brewer Anheuser-Busch <BUD.N> accepted a sweetened $52 billion
takeover bid from Belgium-based InBev <INTB.BR> to create the
world's largest beer maker. []
With U.S. crude <CLc1> drifting away from record-levels at
below $144 a barrel, Shell <RDSa.L> slipped 0.7 percent.
Russia-focused oil company Imperial Energy <IEC.L> jumped
20.1 percent, however, after saying it had received a bid
approach from a party it did not name but which industry sources
identified as Indian state-controlled ONGC <ONGC.BO>.
[]
Among the few FTSE 100 decliners, Reed Elsevier <REL.L>
dipped 0.9 percent as Deutsche Bank cut its target on the
Anglo-Dutch publisher to "hold" from "buy".
Dealers kept a close watch on the British share index.
"The UK's FTSE 100 managed to rebound twice in the last two
weeks at 5,370," said David Scott, senior stockbroker at
Redmayne-Bentley Stockbrokers.
"If the commodity stocks, which have helped support the FTSE
100 over recent times do head sharply southwards, then this will
almost certainly breach this support level ... Worryingly the
market closed below this level on Friday but managed to climb
back above it this morning -- 5,000 looks to be the next
target."
(Additional reporting by Dominic Lau; Editing by David Holmes)
