Shire surge pushes FTSE towards record peak

Fri Jun 20, 2014 6:50am EDT

* FTSE 100 up 0.3 percent

* Shire jumps after rejecting bid valuing it at $46 bln

* Traders expect FTSE to challenge 6,900 point level soon

By Sudip Kar-Gupta

LONDON, June 20 (Reuters) - Britain's benchmark equity index rose on Friday as a surge in the shares of drugmaker Shire lifted the stock market, which many traders expected to inch further towards record highs in coming days.

Shire hit all-time highs and was up by more than 10 percent at 4,134 pence after rejecting a bid from AbbVie Inc which would have valued the group at around 27 billion pounds ($46 billion).

Even though Shire rejected the bid, many traders expected Shire to remain a takeover target. The broader pharmaceuticals sector is experiencing a wave of merger and acquisition (M&A) activity, as highlighted by Pfizer's recent attempt to buy AstraZeneca.

"We've been quite bullish on pharma stocks due to the M&A for quite some time. We haven't sold Shire after the spike higher, we're just holding onto it," said Dafydd Davies, senior trader at Prime Wealth Group.

TRADERS STAY BULLISH

Shire's gains added the most points to the FTSE 100, and ayondo markets' senior trader Jordan Hiscott said Shire's shares could go up to the 5,000 pence level.

The FTSE 100 was up by 0.3 percent, or 21.30 pence, at 6,829.41 by the middle of the trading day.

Traders remained bullish on the index, which is sitting within reach of a record high 6,950.60 set in 1999.

Although the FTSE 100 is only up by around 1 percent since the start of 2014, many traders say the FTSE should rally more strongly if it can get past the 6,900 point level.

"I think the FTSE is a buy at these levels," said Mark Ward, Sanlam Securities' head of trading, who expected the FTSE to hit 6,900 points in the coming days.

($1 = 0.5864 British pounds) (additional reporting by Tricia Wright; Editing by Catherine Evans)

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