Market overview: M&A speculation lends a hand to Footsie

1630:Close UK Stocks ended the session in the blue, propped up by a spate of M&A speculation and news spanning various sectors, including telecommunications (BT Group), orthopaedics (Smith&Nephew) and finance (Friends Life and RBS). That helped to offset weakness in the oil services patch, on the heels of a profit warning out of Petrofac. BT is of particular interest in so far as the acquirers in a possible corporate tie-up more often than not come up on the short-end after the news breaks. In this case the mooted transaction consists of a strategic merger with O2, which might loosen the financial burden of the same, but even so. TalkTalk gained sharply on the back of BT confirming its interest in O2, possibly as investors in the firm felt vindicated in the strategic path which their firm had set out on. FTSE 100 down 21 to 6,730.

1612: Deutsche Bank has maintained its Chinese GDP growth forecasts for this year (7.3%) and the next (7%), saying that downside risks have been reduced the last week's PBoC rate cut. However, it says that the rate cut has "not changed the downward trend in growth". Amid speculation of another imminent rate cut, the German bank said it expects two additional cuts in the deposit and lending rates next year, accompanied by two cuts in the reserve requirement ratio. "The policy stance has clearly changed from marginally loose toward broad based easing, marking the beginning of a policy easing cycle. We expect this cycle to last for the full year of 2015," Deutsche Bank said.

1501: US outfit Stryker is reportedly laying the groundwork of another bid for British rival Smith & Nephew.

1500: Fitch has reaffirmed its AA rating and stable outlook on Royal Dutch Shell.

1402: The UK has awarded outsourcing group Serco a £70m contract to manage an immigration centre over the next eight years.

1137: British telecoms giant BT has confirmed it is in talks with Spanish firm Telefonica to buy O2. According to Spanish website El Confidencial, last week Telefonica chief Cesar Alierta highlighted the need to fend off possible new arrivals from the other side of the Pond, in particular AT&T, as the main driver of the talks. Last Thursday, Alierta reportedly said the "US has no interest in there being European internet giants". For his part, at a conference hosted last week by Morgan Stanley, Alierta's lieutenant, Jose Maria Alvarez Pallete, said all the options were on the table for O2, including a sale, should the trend in the market move further in favour of the bundling of services. In the opinion of Alvarez, BT has the ability to break the market.

1103: Deutsche Bank has pushed back its forecast for the first increase in Bank Rate to August of 2015 from February.

0954: Analysts at Citi have upped their target price on the shares of LSE to 585p from 505p beforehand.

0945: Citi downgrades Hargreaves Lansdown to 'sell' with a target price of 830p.

0944: Shares of First Group are the worst performer now on the FTSE 250. According to the Daily Express the Department for Transport is set to announce the privatisation of the East Coast Mainline this week, with a joint bid from Eurostar and Keolis understood to be the front-runner

0933: Stock in Quindell is again registering a violent bounce higher this morning.

0901: The IFO institute's business climate gauge for Germany rose to a reading of 104.7 in November from the 103.2 level seen in October.

0900: Stocks have begun the day with slight gains, with financials firmly in the lead. Shares in Friends Life are jumping higher after agreeing to a purchase by rival Aviva. Shares in the LSE, Lloyds, RBS and Barclays were close behind. In other M&A news, on Sunday the chief of Italian lender Intesa SanPaolo told the FT that entering the UK market was a top priority for the Italian bank, who is interested in acquiring the entirety of RBS’s wealth management arm, Coutts. Stock in Petrofac is cratering after the company guided lower on its full-year profits. FTSE 100 up 6 to 6,760.