* FTSE 100 up 0.2 pct
* Tullow Oil boosted by UBS upgrade
* Kingfisher up, in exclusive talks to buy French peer
By Tricia Wright
LONDON, April 3 British shares inched higher on
Thursday, led by oil explorer Tullow Oil on the back of an
analyst upgrade, although market gains were muted as investors
waited to see if the European Central Bank would act in the face
of deflation fears.
Tullow Oil rose 3.9 percent, with traders
attributing the move to UBS's decision to upgrade its rating on
the stock to "buy" from "neutral".
"The investment case for Tullow shares has clearly changed.
Less evident for the time being is the high impact offshore
explorer. In its place is a different animal, with greater
leverage to development risk but with significant onshore
exploration upside," UBS analysts wrote in a research note.
Trading volumes in the stock stood at a third of the stock's
three-month daily average in just over an hour of trading -
above volumes for the FTSE 100 which only stand at a 10th of its
Tullow's shares have approximately halved in the past two
years, hit by exploration disappointment.
Adding to the upbeat mood were further signs of a rebound in
corporate activity. Kingfisher, Europe's No. 1 home
improvement retailer, has launched a 275 million euros ($378.6
million) takeover bid for France's Mr Bricolage,
moving to strengthen its position in its most profitable market.
Its shares rose 1.1 percent in early trade. Analysts at
Oriel Securities said the acquisition made strategic sense, and
that the deal should be very modestly EPS enhancing in FY16.
The FTSE 100 was up 14.82 points, or 0.2 percent, at
6,673.86 points by 0814 GMT, having inched 0.1 percent higher in
the previous session, helped by encouraging news on the U.S.
labour market ahead of Friday's U.S. jobs report.
Euro zone monetary policy will fall under the spotlight as
the European Central Bank holds its regular meeting.
While the consensus view is for the ECB to keep interest
rates steady and offer no new aid to the euro zone's fragile
recovery in spite of deflation concerns, analysts reckoned there
was still room for a market pull-back if the ECB does not act.
"I think actually we need either a rate cut or a specific
liquidity measure today - I think if we just get talk, there
will be a slight negative response," said Peel Hunt equity
strategist Ian Williams.
But as the second-quarter gets under way, investors are
broadly bullish about equity markets, pointing largely to signs
that growth in the United States is staying on track.
Technical analysts reckoned the UK benchmark could move back
up towards the top end of the range it has been stuck in since
late October, between about 6,400 and 6,800.
Charles Stanley analyst Bill McNamara says that despite a
mere 0.1 percent rise on Wednesday, the chart is still pointing
to further gains. The index has risen nearly 3 percent since
late March lows.
($1 = 0.7263 Euros)
(Additional reporting by Sudip Kar-Gupta; Editing by Alison