Markets: FTSE driven higher by telecoms deal

THE Footsie surged ahead for the third session in a row yesterday as a multi-billion dollar telecoms deal offset concerns over military strikes in Libya and the ongoing nuclear crisis in Japan.

Markets were buoyed by news that Germany's Deutsche Telekom had agreed to sell T-Mobile USA to AT&T for $39 billion (24bn), in a move that propelled UK mobile phone giant Vodafone to near the top of London's risers' board.

With Vodafone owning a 45 per cent stake in rival US operator Verizon, investors flocked to the UK firm's shares on hopes of further consolidation in the US and following the removal of another player from the market.

Shares were 4 per cent higher - up 6.1p to 176p.

The FTSE 100 index shrugged off worries from crises in Japan and Libya to finish up 67.96 points at 5,786.09 - a gain of almost 1.2 per cent.

This was despite reports suggesting that Japan's nuclear woes were far from over, while the World Bank estimated the devastating earthquake and tsunami has caused $235bn of damage.

David Jones, chief market strategist at IG Index, said: "With plenty of potential for shocks from Libya and Japan, investors will continue to weigh up markets on a day-by-day basis at the moment, so further volatility this week cannot be ruled out."

Oil prices jumped once more after a second night of allied strikes in Libya, where Colonel Muammar al-Gaddafi vowed to fight a "long war". Brent crude rose 1 per cent to more than $115 a barrel. The pound was up against the dollar, which came under pressure from high commodity prices. It was also higher against a buoyant euro, which has strengthened on speculation that this week's European Union summit will bring about further positive developments regarding the sovereign debt crisis. Sterling rose to $1.63 and €1.15.

Banks and commodity stocks were among the biggest beneficiaries of the market's fightback from recent volatility.

Barclays rose 3 per cent or 7.4p to 289.5p, while Fresnillo led the charge in the mining sector with a 43p gain to 1,485p.

A raft of hard-hitting measures from energy watchdog Ofcom to improve service among the "big six" suppliers caused barely a ripple for shares in power firms.

Scottish Gas-owner Centrica was down 0.7p to 327.8p but Perth-based Scottish & Southern Energy was up 1p to 1,235p, while elsewhere in the sector National Grid rose 1p to 578p.

In their first session in the FTSE 100 Index, fund manager Hargreaves Lansdown slipped 2p to 625p, broadcaster ITV was down 0.5p at 86.6p but Aberdeen-based oil services giant Wood Group bucked the trend, up 7.5p at 640.5p.

Engineering stocks were in demand following a series of broker upgrades.

Glasgow-based Weir Group jumped 4.5 per cent or 73p to 1,708p after Credit Suisse upped its rating to "outperform" on valuation grounds.Engine maker Rolls-Royce rose by 3.5 per cent or 20p to 598.5p, supported by an upgrade by Evolution Securities to "buy".

Indian energy firm Essar Energy was the biggest faller, down 7 per cent or 34.6p to 440.4p, with analysts raising concerns over its outlook despite strong full-year figures.