* FTSE 100 index finishes 0.2 percent higher
* Supermarkets advance, bid rumours around Wm Morrison
* Coca-Cola HBC falls as results disappoint
* House builders under pressure, Barratt down
By Atul Prakash
LONDON, May 16 Britain's top equity index edged
higher to finish near a 14-year high on Friday, with
supermarkets advancing on a defensives-led bounce and bid
speculation boosting Wm Morrison.
Sainsbury climbed 4.5 percent, outpacing a 3.8
percent gain by Morrisons and a 2.6 percent rise in Tesco shares
. The companies were the top three gainers on the
blue-chip FTSE 100 index.
"Supermarkets are the best performers, with vague chatter
surrounding a possible bid for Morrisons," said Michael Hewson,
chief market analyst at CMC Markets.
Morrison's advance was helped by mounting speculation that a
U.S.-led private equity consortium was weighing a bid for the
company, traders said. The Daily Mail's market report noted talk
of a possible 6.4 billion pound ($10.8 billion), or 275 pence a
share, cash offer. Morrison declined to comment.
The sector built on gains seen in the previous session when
there was a strong bias towards defensive stocks. These often
lag when markets rise, supporting a view that the good times
will not roll for long.
Frothy valuations are stopping investors from aggressively
putting money to work in equities. The FTSE 100 is trading on a
12-month forward price/earnings ratio of 13.7 times, against its
10-year average of 11.7 times, Thomson Reuters Datastream shows.
"The recent defensive rotation in equity markets underscores
our view that the wider risk-on rally now looks tired," said
Graham Bishop, senior equity strategist at Exane BNP Paribas.
The FTSE 100 rose 0.2 percent to 6,855.81 points to finish
near this week's 14-year high. It fell 0.6 percent in the
previous session, taking its cue from Wall Street, which sold
off after results from Wal-Mart disappointed and as
small-cap shares extended their retreat.
The UK small cap index was down 0.8 percent, while
the mid-cap index fell 1.4 percent, underperforming the
wider stock market.
The FTSE 100's gains were capped by losses at bottler
Coca-Cola HBC after disappointing results, and as UK
homebuilders fell on concerns that authorities may intervene to
prevent a housing market bubble.
Coca-Cola HBC, the world's No. 2 bottler of Coca-Cola
drinks, fell 4.6 percent, the worst performing stock on the FTSE
100 after a bigger-than-expected currency-related quarterly loss
in its Russian and Ukrainian operations.
Home builders fell on growing expectations that the Bank of
England may try to stop a housing bubble by tightening standards
for mortgage lending. Speculation is rife that the central
bank's Financial Policy Committee will toughen lending rules
when it meets on June 17.
Barratt Developments, the country's biggest
housebuilder by volume, fell 3.8 percent, while Persimmon
was down 1 percent.
"Investors are watching house prices, which have risen
quickly. The Bank of England is clearly monitoring the situation
and could take some action to stop the situation turning into a
bubble," said Keith Bowman, analyst at Hargreaves Lansdown.
Britain's housing market has made a swift recovery from the
global financial crisis, with prices up about 10 percent in the
past 12 months.
Mining shares fell on growth concerns in countries such as
China, the world's biggest metals consumer. The UK mining index
fell 1.6 percent, led by a 2.9 percent drop in
Anglo American shares.
(Additonal reporting by Tricia Wright; Editing by Mark