Lloyds Banking Group lifted by reports of overseas interest as investor mood become more optimistic
Sunny skies outside and a sunny mood in front of the trading screens at the start of the week.
Second thoughts about the better than expected US jobs data on Friday helped markets move higher in early trading. The initial worries hat the non-farm payrolls could portend an end to the US Federal Reserve's bond buying programme eased off, while talk of overseas interest in Lloyds Banking Group helped lift the sector as well as the whole market.
Lloyds closed 2.47p higher at 67.1p after reports that overseas investors were considering buying up some of the UK government's 39% stake. Former Standard Chartered boss Mervyn Davies was said to be heading up one consortium, while Singapore fund Temasek was also reported to have expressed preliminary interest. Gary Greenwood at Shore Capital said:
The fact that such heavyweight investors are queueing up for a piece of the action, suggests to us that they remain confident of future capital appreciation and income generation from the shares.
The reports also helped the other state-owned bank, Royal Bank of Scotland, which rose 12.1p to 288.8p.
Overall the FTSE 100 finished 74.55 points higher at 6450.07, its best close since 4 June. Positive comments from ECB boss Mario Draghi on the prospects for the eurozone economy, and news of a deal between Greece and its Troika creditors, helped sentiment, as did an upbeat start on Wall Street. Later the US reporting season begins, with an update due from Alcoa.
Among the other risers, Arm added 19p to 860p after a buy note from Jefferies, which was optimistic about the chip designer's prospects in the server market. Arm has lost a chunk of its value in recent weeks on two main concerns: firstly that it would lose market share in its key smartphone and tablet market; and secondly, its move into the server market to take on Intel was unlikely to make up the difference.
Elsewhere ITV rose 3.3p to 152.8p following reports it might bid up to £90m for Scandinavian production business Nice Entertainment, which makes dramas and reality shows. Ian Whittaker at Liberum Capital said:
As long as ITV does get involved in an expensive bidding war and shows discipline, a deal should be positive.
Among the mid-caps, Hikma Pharmaceuticals jumped nearly 6% after lifting its full year revenue forecast for the second time in just a couple of months. The company said it expected revenues to rise by 17% in 2013 thanks to strong sales of its antibiotic doxycycline. Previously it had forecast a 13% increase in May. Its shares added 56p to £10.50, helped by vague talk of possible merger activity in the sector.
More evidence of a revival in the UK housing market - boosted by government schemes - has come from Bovis Homes.
After positive updates from the likes of Persimmon and Taylor Wimpey last week, Bovis said it had seen a 40% increase in net reservations in the first six months of the year. Its sales growth accelerated in the second quarter after the launch of the government's Help to Buy scheme. Bovis shares climbed 55p to 830p while other builders also continue to rise, with Taylor Wimpey up 3.5p at 106.3p and Persimmon 11p better at £12.67.
But Betfair fell 39.5p to 840p. Traders said that 11m shares, or 10.57%, had been placed with institutional investors on behalf of Softbank at a price of 827p each, a total of around £90m.
Finally Blur Group, which operates an online marketplace for companies to buy and sell services from advertising to legal help, rose 23.5p to 202.5p ahead of a second quarter update on Tuesday.
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