Third day of gains as FTSE looks to consolidate

Published on Friday 7 April 2006 14:16

BRITAIN'S leading shares were on course for their third consecutive day of gains today as the blue chip index made further attempts to consolidate its position above the 6000 level - though it remained shy of the five-year high of 6073 achieved yesterday.

A gain of 13 points had been made over the morning session, taking the index to 6059, despite a tepid reaction to the possible 3 billion sale by aerospace and defence company BAE Systems of its 20 per cent stake in Airbus.

Oil stocks were helping push the top tier on as crude prices hit $68 a barrel for the first time in more than two months, before easing slightly. The sector as a whole was also helped by an upgrade.

BAE's shares nudged down 0.3 per cent on confirmation that it was in talks about a possible sale of its interest in the commercial planemaker, with investors banking profits built up on sale speculation.

"I see BAE down but then coming back up later," said a dealer. "The market is long, and people have been waiting for it, so people are looking to sell.

"The deal is dilutive, so is earnings negative. But once they get the cash, they'll get rid of it pretty quickly."

Energy firms led the risers, with BP up 1.9 per cent, Royal Dutch Shell rising1.7 per cent and BG Group ahead by 0.2 per cent. But mining stocks gave back some of their recent strength despite copper approaching a record $6000 a tonne. Antofagasta weakened 1.1 per cent and Kazakhmys eased 1.5 per cent.

Barclays bank saw its shares jump by 1.2 per cent as vague speculation emerged of a bid for the bank.

Dealers suggested a US group might be interested in bidding for Barclays. No names were mentioned, and Barclays declined to comment. The speculation comes a few days after Alliance & Leicester rose on takeover hopes, although the shares have since fallen back after a bid failed to emerge.

Bid talk also boosted chemicals group ICI , up three per cent and topping the blue-chip leaderboard. Most dealers reported vague bid talk, although one singled out US company DuPont as a possible suitor.

Summarising the trading session, one trader said. "It's a very narrow advance. You've got just two or three sectors that are up really nicely."

Water company Kelda was one of the heaviest blue-chip fallers, off 1.5 per cent.

Internet gaming groups PartyGaming and 888 Holdings also eased after gaining strongly yesterday as opposition emerged to a US bill seeking to crack down on online gambling.

Mid-cap healthcare software developer iSoft fell a further 7.8 per cent on top of yesterday's 11 per cent drop.

Jitters remain around iSoft after speculation about its financial standing, which the company said was unfounded.