* FTSE 100 up 0.5 pct
* Meggitt up 7.2 pct, boosted by report of possible U.S. bid
* Rio leads miners' bounce after update
By Francesco Canepa
LONDON, July 16 Britain's blue-chip index rose
on Wednesday, helped by a rise in engineer Meggitt, at
the centre of bid speculation, and a bounce in mining stocks
after a strong update from Rio Tinto and positive growth
data from China.
Shares in Meggitt rose 7.2 percent to 525 pence after the
Daily Mail, citing dealers, wrote that the U.S. firm United
Technologies Corp could be preparing a 625 pence cash
offer for the British engineering firm.
Meggitt is a key player in the aerospace sector, which is
meeting this week at Farnborough for an industry event. It
declined to comment on the report. UTC did not immediately
respond to a request for comment.
The prospect of a potential bid led speculative sellers to
close their negative bets, or "shorts", on the stock, which had
fallen nearly 9 percent since late June, traders said.
"I don't think there will be a huge amount of people going
long on the back of this but people who were short would be
scrambling to cover," said Mark Ward, head of execution trading
at Sanlam Securities UK.
"I'd probably be a little bit sceptical (on any bid
materialising) to be honest."
Short sellers - who borrow a stock and sell it, betting they
will be able to buy it back at a lower price before returning it
to the lender - have targeted Meggitt over the past month.
Around 5.7 percent of Meggitt's shares available to be
borrowed were out on loan on June 14, up from 0.4 percent on
June 10, Markit data showed.
It was the top riser on the FTSE 100, which was up 30.79
points, or 0.5 percent, at 6,741.24 points, recouping most of
the losses suffered in the previous session, when Federal
Reserve Chair Janet Yellen voiced concern over valuations.
Also supporting the index were mining stocks after Rio
Tinto, up 1.6 percent, reported a sharp rise in iron ore output
in Australia, and Chinese growth data slightly beat
Rio Tinto aggressively expanded shipments to China in the
second quarter, banking on its low costs to displace local
"We expect Rio Tinto shares to outperform the sector this
morning, on the back of solid production results," analysts at
Societe Generale wrote in a note.
"We also expect iron ore prices to recover soon as more than
half of the Chinese iron ore mines should not be viable at
(Reporting By Francesco Canepa; Editing by Kevin Liffey)