* FTSE 100 up 0.2 percent; trading volume thin
* ITV aided by acquisition news, target hike
By Tricia Wright
LONDON, Dec 24 Britain's top shares edged higher
on Monday in a quiet half session before the Christmas break,
with some strength seen from banks and commodity stocks, though
uncertainty over U.S. budget talks could limit near-term gains.
The FTSE 100 closed up 14.19 points, or 0.2 percent,
at 5,954.18, within sight of a nine-month high of 5,977.82 hit
on Wednesday. Trading volumes were very thin at just 21 percent
of the 90-day daily average.
Banks, miners and oil stocks
were behind nearly all of the FTSE 100's points
gain as investors positioned ahead of a two-day holiday.
But the mood remained cautious as talks between U.S.
Democrats and Republicans to head off the "fiscal cliff" of
automatic tax hikes and spending cuts stalled, with President
Barack Obama and House Speaker John Boehner out of Washington
for the Christmas break.
"Until they actually are able to produce something that
removes some of the uncertainty... I think (markets) will be
quite restrained from moving sustainably higher and, if
anything, they could be prone to some profit-taking," said Mike
Lenhoff, chief strategist at Brewin Dolphin.
On an otherwise slow day in terms of corporate news, merger
and acquisition activity provided the market with some interest,
in a trend which fund managers see picking up in the new year.
ITV, Britain's largest free-to-air commercial
broadcaster and home to period drama "Downton Abbey", rose 0.6
percent after saying it will buy a 61.5 percent stake in
U.S.-based Gurney Productions, which makes reality programmes.
Westhouse Securities lifted its target price for ITV to 125
pence from 115 pence, and repeated its "buy" recommendation on
the stock, to reflect positive momentum within the group.
Westhouse said it was not planning to change its forecasts
in light of the deal but sees scope for upgrades in 2013.
Trading volume in ITV was very thin at just 17 percent of
the 90-day daily average.
Among medium market capitalisation stocks, software group
Micro Focus International edged up 0.3 percent after
announcing its acquisition of assets from U.S.-listed Progress
Software for $15 million.
"Sound industrial logic, a neat price, earnings enhancing
and the opportunity to get some mojo (i.e. inorganic growth)
into that insipid revenue line - what's not to like?," Panmure
Gordon said in a note.
The broker raised its 2014 earnings per share estimates for
Micro Focus by 3.8 percent and hiked its target price for the
stock to 647 pence from 633 pence.
"The funds I manage have benefited throughout 2011 and 2012
from buyouts, and I expect this activity to continue, and
perhaps accelerate, into 2013," said Alex Wright, manager of
Fidelity UK Smaller Companies Fund and Fidelity Special Values -
which have 78.76 million pounds ($127.45 million) 348.54 million
pounds under management respectively.
"I think the conditions are perfect for M&A activity, with
record low interest rates, strong corporate balance sheets in
large caps, bargain valuations in small caps, and the economic
environment rewarding those organisations that can operate at
maximum scale and efficiency," he said in a note.
On the downside, BT Group shed 1.1 percent as the
stock traded without entitlement to its latest dividend payout.
($1 = 0.6180 British pounds)
(Reporting by Tricia Wright; Editing by Hugh Lawson)