London close: UK stocks surge 1.1% to two-week high on M&A, Greece

London's FTSE 100 bounced to finish above the psychological 7,000 level for the first time in over two weeks on Thursday, helped by easing concerns about Greece and continued M&A speculation.

The Footsie closed 77.95 points higher (+1.12%) at 7,015.36 with Burberry and Intercontinental Hotels Group (IHG) rising on bid hopes.

The blue-chip index has not settled above this level since 24 March and now sits just below its all-time closing high of 7,037.67.

Stocks charged higher after Greece successfully completed a €450m loan repayment to the International Monetary Fund.

"With Greece proving to be good for its word and paying back the IMF, equities around Europe were free to charge higher," said analyst Alastair McCaig from IG.

Stocks even managed to hold on to gains despite a weak start on Wall Street after upbeat labour-market data. Minutes of the latest Federal Reserve meeting revealed Wednesday that policymakers were divided on when to hike interest rates, though they reiterated that any change in policy would be data dependent.

US initial weekly jobless claims rose by 14,000 last week, though this was less than expected, as the monthly moving average fell to its lowest level since 2000.

Data elsewhere came in mixed: the UK trade deficit widened to a seven-month high of £10.34bn in February, German factory orders unexpectedly fell 0.9% in February, while German industrial production and trade data was better than forecast.

UK markets had started on the front foot early on after stocks in Asia mostly gained overnight, with Hong Kong's Hang Seng rising to its highest since January 2008 as investors from mainland China piled in, and Japan's Nikkei 225 hitting a fresh 15-year high.

Burberry and IHG rise on M&A hopes, miners fall

British fashion house Burberry was a high riser amid speculation it could attract the attention of a US rival or cash-rich private equity groups. The stock was given an extra boost by JPMorgan Cazenove which hiked its target price, and Goldman Sachs which placed the stock on its "conviction buy" list.

The stock was also benefitting from positive readacross from sector peer Mulberry which said it expected full-year profits to be slightly ahead of forecasts following a series of warnings.

Hotels group IHG was also in demand after Jefferies upgraded the stock to 'hold' and lifted its target price from 2,000p to 2,400p. The broker sees the company as a potential takeover candidate, saying that M&A is set to return in the hotel industry as growth slows.

Mining stocks were mostly lower, including BHP Billiton and Anglo American after Credit Suisse and Investec downgraded their ratings on both companies. Both banks expressed concerns about falls in iron ore and coal prices due to structural issues, namely a weaker Chinese economy, together with low cost supply.

Asset manager Aberdeen advanced as investors reacted positively to the launch of four low-cost multi-asset funds in the aftermath of the recent pensions market shake-up.

The poaching of Reuters' chief executive by Euromoney Institutional Investor sent shares in the business publisher higher on Thursday.

Poundland Group was a big faller after the UK competition regulator threatened to reject the discount retailer's proposed acquisition of rival 99p Stores Limited.

A number of AIM oil explorers saw shares rocket on Thursday after the Horse Hill project in the South of England made a "significant" discovery, said to be the largest onshore find in the country for 30 years. Partners of the project include UK Oil & Gas Investments, Doriemus, Alba Mineral Resources, Stellar Resources, Solo Oil and Evocutis.

Market Movers
techMARK 3,234.75 +0.99%
FTSE 100 7,015.36 +1.12%
FTSE 250 17,715.54 +0.88%

FTSE 100 - Risers
Aberdeen Asset Management (ADN) 485.00p +4.23%
CRH (CRH) 1,809.00p +3.25%
Persimmon (PSN) 1,733.00p +3.15%
HSBC Holdings (HSBA) 604.00p +2.90%
Burberry Group (BRBY) 1,792.00p +2.81%
Mondi (MNDI) 1,397.00p +2.72%
Compass Group (CPG) 1,209.00p +2.63%
Sports Direct International (SPD) 643.00p +2.47%
Pearson (PSON) 1,466.00p +2.45%
InterContinental Hotels Group (IHG) 2,737.00p +2.36%

FTSE 100 - Fallers
Aggreko (AGK) 1,543.00p -3.26%
Standard Life (SL.) 473.80p -1.78%
Shire Plc (SHP) 5,420.00p -1.19%
BHP Billiton (BLT) 1,453.00p -1.09%
Intertek Group (ITRK) 2,585.00p -0.58%
Ashtead Group (AHT) 1,059.00p -0.47%
Next (NXT) 7,050.00p -0.42%
Royal Bank of Scotland Group (RBS) 347.80p -0.26%
Anglo American (AAL) 1,024.00p -0.24%
Rio Tinto (RIO) 2,852.50p -0.04%

FTSE 250 - Risers
Euromoney Institutional Investor (ERM) 1,185.00p +4.50%
Just Retirement Group (JRG) 175.90p +4.39%
Jupiter Fund Management (JUP) 424.70p +4.20%
Vedanta Resources (VED) 539.00p +4.15%
JD Sports Fashion (JD.) 490.00p +3.97%
Ashmore Group (ASHM) 311.80p +3.90%
Fidelity China Special Situations (FCSS) 164.70p +3.85%
Greggs (GRG) 1,070.00p +3.58%
William Hill (WMH) 390.00p +3.28%
Smith (DS) (SMDS) 369.90p +3.27%

FTSE 250 - Fallers
Poundland Group (PLND) 344.60p -4.54%
Serco Group (SRP) 142.40p -3.72%
NMC Health (NMC) 674.50p -3.02%
RPS Group (RPS) 238.00p -2.82%
Countrywide (CWD) 520.50p -2.71%
AO World (AO.) 185.00p -2.63%
Just Eat (JE.) 425.50p -2.54%
Hellermanntyton Group (HTY) 338.90p -2.47%
Jimmy Choo (CHOO) 169.80p -2.13%
Dechra Pharmaceuticals (DPH) 1,009.00p -2.13%