* FTSE 100 index rises 0.3 percent
* TUI Travel gains on plans to merge with TUI AG
* Housebuilders aided by bullish HSBC note
* Rolls-Royce up; Airbus set to revamp A330 with the firm
By Tricia Wright
LONDON, June 27 Britain's top shares rose on
Friday, led by TUI Travel on plans for a merger, while
housebuilders drew further support on less draconian curbs on
home loans by the Bank of England than some had expected.
TUI Travel, Europe's biggest tour operator, and
majority owner TUI AG will come together in an
all-share deal, the two said, ending months of speculation.
Their shares rose 3.5 percent and 5.5 percent, respectively.
Housebuilders also notched up strong gains. Barratt
Developments jumped 3.2 percent, second-top FTSE 100
riser, and Persimmon climbed 1.5 percent, whilst Redrow
, up 5.5 percent, and Taylor Wimpey, 3.5 percent
firmer, were among the best mid-cap risers.
Estate agency Foxtons was the second-top FTSE 250
gainer, up 6.8 percent.
The housebuilders' gains, which built on a steep climb the
previous session fuelled by the Bank of England announcement,
came as HSBC flagged up a "golden" entry opportunity into the
The Thomson Reuters UK Homebuilding index
has fallen some 11 percent since a late February peak.
"Yesterday's news gives welcome visibility and should boost
the market's confidence in our base case and target prices which
project up to 66 percent potential returns across the sector,"
HSBC analysts said in a note.
Bellway, Crest Nicholson and Taylor Wimpey
are its top picks.
While the milder-than-expected measures prompted a relief
rally, interest rate rises remain a risk for the housing market
as Britain's economy grows robustly, as seen in Friday's GDP
The headline economic growth rate for the first quarter was
unchanged at 0.8 percent in revised official data on Friday, but
the numbers showed that business investment was growing almost
twice as fast as previously thought.
BoE Governor Mark Carney has raised the possibility of an
interest rate rise later this year if wage growth picks up and
economic growth does not slow down.
Elsewhere among the risers, Rolls-Royce advanced 2.2 percent
on a Reuters report saying Airbus was set to upgrade
its A330 planes with the aero-engine maker as an exclusive
The broader FTSE 100 index closed up 0.3 percent at
6,757.77 points. However, the index posted a 1 percent drop this
Although the index rose on Friday, investors were reluctant
to place big bets in the absence of new market catalysts and
pending the second-quarter earnings season. Violence in Iraq
also dampened appetite for riskier assets.
"Investors continue to search for the next crucial market
catalyst. Central bank action and geopolitical events remain
high on the agenda," Hargreaves Lansdown analyst Keith Bowman
"Given the degree of uncertainty, a balanced diversified
investment portfolio looks to remain important."
(Reporting by Tricia Wright and Atul Prakash; editing by Andrew