* FTSE 100 rises 1.1 pct to 6,784.67 points
* Miners bounce after Rio update, China data
* Meggitt up 9.6 pct on report of possible bid
By Atul Prakash
LONDON, July 16 Britain's top share index hit a
one-week high on Wednesday, with engineering firm Meggitt
surging on bid speculation and miners rallying after a strong
update from Rio Tinto and encouraging economic growth data from
The FTSE 100 advanced 1.1 percent to 6,784.67
points. The FTSE 350 mining index rose 2.7 percent
to a 4-1/2-month high, making it the sector that gained the most
in the FTSE 350 index, which climbed 1.1 percent.
Miners got support from data showing growth in China, the
world's biggest metals consumer, beat expectations and after
miner Rio Tinto, up 2.8 percent, reported a sharp rise
in iron ore output in Australia.
"An upside surprise on Chinese GDP, alongside positive
corporate newsflow, is helping the mining sector to outperform
today," Robert Parkes, equity strategy director at HSBC, said.
"This sector remains heavily out of favour amongst investors and
so a little bit of positive news can go a long way."
The market was also helped by a 9.6 percent surge in Meggitt
shares to 537 pence. Citing dealers, the Daily Mail
wrote that the U.S. company United Technologies Corp may
be preparing a 625 pence cash offer for the British engineering
firm, which is a key player in the aerospace sector.
Meggitt declined to comment. A spokeswoman for United
Technologies could not be reached for comment.
The prospect of a bid led speculative sellers to close their
short positions, or bets against the stock, traders said. The
shares had fallen nearly 9 percent since late June.
"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.
Short sellers borrow a stock and sell it, expecting to buy
it back at a lower price before returning it to the lender. Over
the past month, they have targeted Meggitt - around 5.7 percent
of its shares available to be borrowed were out on loan on June
14, up from 0.4 percent on June 10, Markit data showed.
Meggitt was the top riser on the FTSE 100 index, which
climbed to its highest since early July and recouped most of its
losses from Tuesday, when U.S. Federal Reserve Chair Janet
Yellen voiced concern over valuations.
On the economic front, the market showed little reaction to
a report that Britain's unemployment rate fell to its lowest
since late 2008 in the three months to May, while wages grew
less than expected. Employment reports are usually watched for
clues about the timing of an interest rate hike, although
inflation and wage data are coming more into focus recently.
"The figures do not suggest any immediate change in MPC
thinking, as the rise in average wages was somewhat subdued,
admittedly influenced by unfavourable base effects," Nick
Beecroft, senior market analyst at Saxo Capital Markets, said,
referring to the Bank of England's Monetary Policy Committee.
"I continue to expect a rate rise in Q4 2014."
(Additional reporting by Francesco Canepa; Editing by Raissa
Kasolowsky and Hugh Lawson)