Footsie’s best week in three years

RUMOURS that a pair of private equity firms were preparing a cash bid for Argos-owner Home Retail Group sent the stock soaring by 10 per cent yesterday.

Former Marks & Spencer chief executive Sir Stuart Rose is being lined up to become executive chairman of the group if CVC Capital and Bridgepoint Capital are successful with their bid, according to reports.

Rose is no stranger to the business, which also owns Homebase – he served as Argos’s chief executive for three years from 1997. HRG rose 8p to 98.4p.

The Footsie put in its strongest weekly performance in nearly three years after a German call for greater fiscal union in the eurozone and a better-than- expected improvement in the US unemployment rate lifted investors’ confidence.

Britain’s 100 biggest listed companies have added £100 billion to their market value this week as the market surged 7.4 per cent – the biggest gain since January 2009.

The FTSE 100 index closed 1.1 per cent higher on the day, up 62.95 points at 5,552.29, after German chancellor Angela Merkel said the European Union treaty must be changed to enforce stricter financial control across the 17-nation eurozone.

Merkel’s comments come ahead of a crucial EU summit in Brussels next week when she and French president Nicolas Sarkozy are expected to propose joint action in a bid to restore market confidence.

Elsewhere, the US labour department revealed the unemployment rate fell to its lowest level since March 2009.

The pound was down against the dollar, strengthened by the better-than-expected unemployment figures, at $1.55, while sterling was lower against the euro at €1.16 as hopes for a pending resolution to Europe’s woes lifted the single currency.

The banking sector, boosted by a co-ordinated move earlier this week by six central banks to improve dollar liquidity, was the main beneficiary of the improved sentiment.

Barclays was top of the risers board as it gained 13.5p to 190.7p and Lloyds Banking Group rose 1.4p to 25.4p. Royal Bank of Scotland, which also announced the sale of more than 900 pubs to Heineken in a £422 million deal, rose 1.1p to 21.6p.

“Defensive” utility stocks fell out of favour and filled the fallers board, with Perth-based SSE – the group formerly known as Scottish & Southern Energy – down 3 per cent or 44p at 1,274p, National Grid off 20p at 607.5p and Scottish Gas owner Centrica dropping 5.4p at 296.3p.

William Hill – chief operating officer at Helius Energy, which is building a power plant in Moray to turn waste products from the whisky industry into electricity – spent £28,750 on 250,000 shares at 11.5p each. The move comes just days after shipping group scion Alastair Salvesen joined Helius’s board as a non-executive director. The shares closed up 0.11p at 11.99p.

Edinburgh-based oil explorer Bowleven recovered some of its recent losses, climbing 11.9 per cent or 7.75p to 72.75p.

Shares in IndigoVision, the Edinburgh-based CCTV firm, continued to recover on the back of last Friday’s trading statement, which said profits will be higher than City expectations. In thin trading, the stock rose a further 7.6 per cent or 20p to 285p.