Markets: Takeover talk boosts Burberry brand

LONDON FTSE 100 CLOSE 5,598.48 +51.4

Traders said that Burberry - famous for its red, black, white and camel-coloured check pattern - was being stalked by an American private equity firm, sending its shares up 6 per cent or 56.5p to 1,002p.

Renewed takeover chatter surrounding ARM sent its shares 23.8p higher to 414.6p. American software giant Oracle was rumoured to be the most likely candidate for a swoop, following comments from the US firm's chief executive that he was keen on new acquisitions and ARM was a potential target.

Edinburgh-based chip maker Wolfson shared in the share price surge, up 5.5 per cent or 12.25p at 236.75p.

In the wider market, stocks resumed their rally as traders were encouraged by positive economic data from the US and Europe.

The US Commerce Department reported a higher-than-expected rise in orders for manufactured goods, excluding the volatile transportation sector, while a surprise jump in business confidence in Germany also tempered worries about economic recovery.

Steven Bell, director at hedge fund GLC, said: "There were a number of people who were looking for the US data to disappoint. Growth (in the US] seems to be struggling in a 1.5 per cent to 2 per cent range, and I do think we'll break through the top of this."

The FTSE 100 Index received a late session boost and closed 51.4 points up at 5,598.48. The index has risen 7.1 per cent so far this month, on track for the best monthly performance since August 2009.

Positive data from Germany also helped sentiment, with the Munich-based Ifo research institute reporting a rise in its business-sentiment index to 106.8 in September, defying expectations of a drop.

The positive data from the eurozone saw the pound drop against the euro to €1.17, while it was up against the dollar at $1.58.

UK banking stocks clawed back early losses after a UK government inquiry confirmed it would look at the possibility of a break-up of the major high street players.

The Independent Commission on Banking said it would look at separating retail and investment banking operations and added it was also considering ways to improve high street competition, which could see the largest banks forced to off-load assets.

HSBC was in the spotlight following speculation over succession plans, with shares up 2.3p at 666.3p. After the market closed, the banking giant confirmed that chief executive Michael Geoghegan is to step down by the end of the year as part of a major boardroom shake-up.

Stuart Gulliver, head of the group's investment banking operation, will take over as chief executive, while finance director Douglas Flint becomes chairman, replacing Stephen Green who recently quit to become a trade minister.

Elsewhere in the sector, Barclays rose 5.5p to 311.75p, part-nationalised Lloyds Banking Group dropped 1.5p to 76.6p and Royal Bank of Scotland also recovered from a weak start to stand 1.3p higher at 49.3p.