June 20, 2014 / 2:36 PM / in 3 years

UK's FTSE 100 strengthens as Shire surges

* FTSE 100 up 0.4 percent

* Shire jumps after rejecting bid valuing it at $46 bln

* Traders expect FTSE to challenge 6,900-point level soon

By Sudip Kar-Gupta

LONDON, June 20 (Reuters) - Britain’s FTSE 100 rose on Friday on the back of a surge in the shares of drugmaker Shire, and many traders expected the benchmark equity index to test record highs soon.

Shire hit all-time highs and was up by 19 percent at 4,450 pence, adding 17 points to the FTSE, after rejecting a bid from AbbVie Inc which would have valued the group at about 27 billion pounds ($46 billion).

The FTSE 100 was up 0.4 percent, or 28.06 points, at 6,836.17 at the end of the trading session neared.

Even though Shire rejected the bid, many traders expected the company to stay in bidders’ sights. The pharmaceuticals sector is experiencing a wave of merger and acquisition (M&A) activity, as highlighted by Pfizer’s recent attempt to buy AstraZeneca.

“We’ve been quite bullish on pharma stocks due to the M&A for quite some time. We haven’t sold Shire after the spike higher, we’re just holding onto it,” said Dafydd Davies, senior trader at Prime Wealth Group.

Traders remained bullish on the FTSE 100, which is within reach of a 6,950.60 record high set in 1999.

Although the FTSE 100 is only up by about 1 percent since the start of 2014, many traders say the FTSE should rally more if it can get past the 6,900 point level.

“Other stock markets such as the German DAX and U.S S&P have broken new highs, and it must only be a matter of time before the FTSE follows suit,” said Novum Securities technical analyst Adrian Slack. ($1 = 0.5864 British pounds) (Additional reporting by Tricia Wright; Editing by Louise Ireland)

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