* FTSE closes flat; mining, tobacco shares up
* Royal Mail shares slips after results
* SABMiller gains on cost-saving target
By Atul Prakash
LONDON, May 22 Britain's top share index ended
flat on Thursday as stronger miners on steadier China data and a
rise in tobacco stocks on deal-making hopes were offset by sharp
declines in firms including Royal Mail and AstraZeneca.
Miners were boosted by signs of stabilisation in the economy
of top metals consumer China, where the factory sector turned in
its best performance in five months in May, a private survey
The UK mining index rose 0.7 percent, the top
sectoral gainer on the blue-chip FTSE 100 index, helped
by a 1.9 percent gain in Antofagasta and a 1.3 percent
rise by Rio Tinto.
Deal-making activity also gave the market a fillip, with
news that British American Tobacco could back a
potential merger between Reynolds American and Lorillard
in a complex three-way transaction helping tobacco
British American Tobacco rose nearly 3 percent before paring
gains later to end 0.5 percent firmer. Imperial Tobacco
ended 0.9 percent higher.
"The environment for M&A is quite positive at the moment as
uncertainties are diminishing and the confidence of company CEOs
is rising. We are also seeing an improvement in economic
activity," said James Butterfill, equity strategist at Coutts.
"It's quite likely that M&A activities will remain robust
and continue to provide support to the stock market."
However, the FTSE 100 ended flat at 6,820.56 points. The
index finished just less than 2 percent below its record high of
6,950.60 points, recorded in December 1999.
Mining and tobacco shares helped the market to stay in
positive territory during most of the trading sessions. However,
there were sharp declines in some individual shares.
AstraZeneca fell 3.3 percent on continued
uncertainty over whether a $118 billion takeover bid by Pfizer
might be revived, following gains of more than 2 percent
And the recently privatised Royal Mail fell 9.7
percent to 519.0 pence, the biggest FTSE 100 faller, after
warned about the strength of competition as it reported a rise
Jordan Hiscott, senior trader at Ayondo Markets, said the
shares had recently been at the upper end of their range, some
70 percent above the 330 pence flotation price, and the figures
would have needed to be better aleppo pls to drive further
"This morning's release of the headline figure for the full
year pre-tax profit, coming in at 363 million pounds ($613
million) instead of the expected 400 million, shows increasing
challenges in the face of competition."
Among other movers, global brewer SABMiller rose 3.5
percent, the top gainer on the FTSE 100 after announcing a new
savings target to help cushion it against difficult trading in a
range of markets.
(Additional reporting by Tricia Wright; Editing by John