FRIDAY MARKET CLOSE: £31bn deal keeps Footsie in the black

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Confirmation that a US bid for pharmaceuticals firm Shire had finally made progress helped prop the London market up and distract investors from the fire and brimstone on their television screens.

The City remained cautious about the £31 billion deal, with Shire up 190p to 4,996p – still a good deal shy of AbbVie’s 5,319-a-share offer.

Jasper Lawler, market analyst at CMC, said: “The agreement is one step closer to a deal than rivals Pfizer and AstraZeneca managed. AbbVie’s success could possibly spark more tax inversion deals from US firms looking for lower tax rates.

“The M&A activity demonstrates some confidence in market conditions and so went some way towards creating some positive sentiment after the worst sell-off in months.”

The FTSE 100 index climbed into positive territory with a late recovery despite a sharp rise in geo-political fears caused by events in Ukraine and the Middle East. The index ended the day 11.14 points higher at 6,749.45.

Despite the rise in tensions, airline stocks had a steadier session after dropping on Thursday, with British Airways owner IAG just 0.8p lower at 329.9p and EasyJet 7p higher at 1,348p. Tour operators Thomas Cook and Tui Travel fell 2p to 122.7p and 0.2p to 372.1p respectively.

Drugs firms AstraZeneca and GlaxoSmithKline benefited from the Shire deal as their shares rose by 25.5p to 4340p and 9.5p to 1,559p respectively.

ITV also remained in the takeover spotlight as the sale of BSkyB’s stake in the commercial broadcaster to Virgin Media owner Liberty Global excited media investors for a second day in a row. The stock rose a further 4 per cent or 7.4p to 202.6p.

Royal Bank of Scotland was lower after the Competition & Markets Authority announced it is considering a full-scale inquiry into the sector. With the watchdog refusing to rule out a break-up of the big four banks, RBS fell 2 per cent or 4.5p to 319.2p but Lloyds Banking Group weathered the storm as its shares rose 0.25p to 73.42p.