Markets: Man Group leads FTSE higher

MAN Group, the world's largest listed hedge fund, led the FTSE 100 gainers board yesterday after speculation of a takeover bid.

Shares in the London-based financial firm closed up 5.2 per cent at 239.6p on speculation that US fund giant BlackRock saw buying it as a means to grow its hedge fund capability.

The wider FTSE 100 was boosted again by strong gains among mining and financial companies, on renewed hope of improving economic fortunes.

Britain's leading index of the largest 100 listed companies closed up 32.58 points, or 0.6 per cent, at 5,276.64, touching a two-week high during the session after it added 1.5 per cent on Tuesday. The midcap FTSE 250 index jumped 153.65 points, or 1.7 per cent, to 9329.92p.

Banks continued to rally on reinvigorated sentiment delivered by strong results from Barclays on Tuesday.

Ian Gordon at Exane BNP Paribas said Barclays' results had prompted a "material" upgrades for 2010 and 2011, but maintained an "underperform" rating, arguing that shares in rival banks have more scope to rally this year.

Barclays closed up 2.9 per cent at 302.3p. Elsewhere in the sector, Royal Bank of Scotland rose 1.9 per cent to 33.9p, Lloyds Banking Group lifted 3.2 per cent to 50.57p and HSBC gained 2 per cent to 681p.

Plumbing supplies group Wolseley jumped 67p to 1,445p after stronger than expected industrial figures from the US, where much of its business is derived.

And Sainsbury's rose 6.1p to 332.4p as analysts at Evolution Securities initiated coverage of the company with a "neutral" rating and a 325p target price.

The retail sector was broadly higher, helped by broker upgrades on Argos and Homebase firm Home Retail Group. B&Q parent Kingfisher rose 6.9p to 213.2p, while Home Retail Group jumped 7.5p at 266.1p.

Legal & General headed north as analysts speculated that an increase in the dividend could be on the cards after its cash generation in 2009 was well ahead of its own target and City forecasts.

L&G's capital position is also much stronger than it was a year ago, when its shares collapsed on fears that it would have to carry out a rights issue. Its shares closed up 2p at 76.35p.

Elsewhere, Edinburgh-based Standard Life gained 1.5p to 197.2p, while Prudential closed up 19p at 603.5p.

Mining companies also continued to rise. Eurasian Natural Resources was the biggest gainer in the sector, closing up 39.5p at 1,006p, while Rio Tinto climbed 42p to 3,400p.

Among the fallers, Scottish & Southern Energy dropped 34p or 2.87 per cent to 1,218p after its shares traded without the rights to its latest dividend for the first time. Oil giant BP, which also went ex-dividend yesterday, fell 2.65 per cent to 572.6p.

The battle for control of VT Group, the logistics and defence company, continued with reports citing sources at the company claiming that any bid would have to be pitched at around 700p a share to be successful.

Babcock International has had an initial bid for the company rejected, but is thought to want access to VT's books before it considers raising its offer.

Elsewhere, there were reports that Lockheed Martin may be a potential white knight in the battle, and that VT's dismissal of Babcock's initial approach has dismayed shareholders.

VT Group jumped 4.5 per cent to 621.5p, while Babcock rose 3.5 per cent to 566p.

Among the small caps, sausage casing company Devro continued to rise on the back of Tuesday's bullish results, in which it raised its dividend for the first time in four years. Shares in the Moodiesburn-headquartered company closed up 5p at 155p.