* FTSE closed up 1.2 percent
* Vodafone gains on talk of Verizon, AT&T bid
* ICAP boosted by NASDAQ/eSpeed deal
* Banks up after U.S. judge dismisses misselling claims
By David Brett
LONDON, April 2 Britain's top shares closed
sharply higher on Monday as a return of M&A fervour, after
heavyweight Vodafone was reported to be the subject of a
multi-million pound breakup bid, helped propel shares back
towards 2013 highs.
Vodafone rose 2.9 percent after the Financial Times
Alphaville blog cited "usually reliable people" as saying that
Verizon Communications and AT&T had been working
together on a breakup bid for the British group.
The bid would be pitched at about 260 pence a share, around
a 40 percent premium to the current price for Vodafone, the
world's second largest mobile operator.
"Although much of the news is now in the share price,
Tradenext ... will continue to add on any dips. Any inkling of a
bid from Verizon will almost certainly drive the shares above
200 pence," Ronnie Chopra, head of strategy at Tradenext, said.
Vodafone's shares are up around 20 percent in 2013 on
persistent M&A talk. Its weighting accounts for around 6 percent
of the entire FTSE 100 and the company's shares added
nearly 10.5 points alone to the index on Tuesday.
London's blue chip index closed up 78.92 points or 1.2
percent at 6,490.66, approaching the 6,533.99 level reached in
March, which was this year's intraday high and its highest level
since January 2008.
Interdealer broker ICAP, hit hard by a recent profit
warning, rebounded 6.1 percent after traders reassessed the
company's value following a move by U.S. exchange operator
Nasdaq to buy rival electronic Treasuries-trading
platform eSpeed from BGC Partners.
British airways owner IAG, which is in talks to buy
Spanish budget airline Vueling, climbed 2.9 percent,
while Britain's No.4 grocer Wm Morrison Supermarket,
which is seeking a tie-up with Ocado, added 2.5
"I do not think there is an M&A premium in the market at the
moment, but (if M&A picks up) ... that (bid premium) could push
the market even higher," said James Humphreys, senior investment
manager at Duncan Lawrie Private Bank.
EQUITIES IN VOGUE
A revival in merger and acquisition activity and continued
stimulus measures from world central banks helped equity markets
rise in early 2013, despite a resurgence of the euro zone debt
crisis which saw Cyprus bailed out on tough terms last month.
"The year has begun with a bit of a bang as far as equity
markets are concerned. Though the strength of returns has caught
many investors out, the small number of negative days has
broadly been seen as opportunities to buy," Ian Heslop,
portfolio manager at Old Mutual Global Equity Fund, said.
The FTSE 100 climbed again after a peak-to-trough fall of
2.3 percent towards the end of March on concerns over contagion
Heslop said the next leg of the rally would be hard to call,
but after many years of bond markets having all the headlines,
the market may now be seeing the beginning of a period when
equities are once again "cool".
"No one wants to win the least ugly contest, but that may be
where we are with equities, that they are benefiting from being
somewhat more interesting than other investment opportunities,"
A JP Morgan Private Bank survey showed European high-net
worth individuals are betting stocks will outperform all other
asset classes this year and plan to increase their positions.
After a brief pause on European debt worries the banks
found firmer ground, up 1.6 percent and supported
by a potential weight on their earnings outlook being lifted.
Potential losses from private lawsuits related to interest
rate-rigging could be materially lower after a U.S. judge
dismissed a large portion of such claims.
And there could be more gains for the FTSE 100, despite
being near five-year highs, as short interest gets squeezed out
of the market.
(Reporting by David Brett; editing by Stephen Nisbet)