London close: Investors watching the Fed as traders focus on M&A

11th Jul 2014 17:00

- FTSE 100 stabilises after hitting lowest since April 17th- M&A activity intense in the UK and on the continent- UK construction output declinesMarket MoverstechMARK 2,782.29 +0.44%FTSE 100 6,690.17 +0.27%FTSE 250 15,451.42 +0.07%Equity and bond markets across the Continent were granted a respite from the selling pressure on Friday following the worries surrounding Portugal's banking sector on the previous day.The FTSE 100 dropped to its lowest in nearly three months on Thursday on fears of contagion linked to a missed debt payment by the parent company of Banco Espirito Santo (BES), the largest listed lender in Portugal. However, BES attempted to assure investors this morning, saying it has limited exposure to the Espirito Santo holding company.London's benchmark index was up 0.27% to 6,690 by the finish, led by strong gains in Shire and the tobacco sector. A scaling back of risk appetite saw the Footsie fall to 6,672.37 by the close of trading yesterday, its lowest finish since April 17th. "The four-day sell-off that the markets have been subjected to gives the distinct feeling the FTSE is being oversold and a combination of shorts profit-taking and buy-on-dip traders should see considerably less red on the screens today," said Alastair McCaig, Market Analyst at IG.Economic data was thin on the ground, although the recent run of weak figures had their continuation in the form of a report on UK construction output which showed an unexpected fall in May in a sign that economic growth could have lost pace in the second quarter. Output fell by 1.1% month-on-month after rising by 1.2% in April. Economists had expected to see 0.9% growth.Acting as a backdrop, US Federal Reserve policymakers continued to stake out their positions regarding the debate on the timing of the first rate hike, as investors globally begin to more closely monitor both US central bankers and their local ones. To take note of the President of the Federal Reserve bank of Richmond was cited as having said the US central bank is closer to a rate hike than many think.M&A lights up tobacco stocksStock in Shire surged towards the end of trading on reports that it has finally held conversations aimed at a possible takeover by AbbVie.Shares in Imperial Tobacco rose strongly after the company confirmed it is discussions with US rivals Reynolds American and Lorillard about the potential acquisition of some of their assets and brands. It is thought that Reynolds and Lorillard, the second- and third-largest cigarette makers in the States respectively, are looking to sell assets in a bid to win over competition authorities ahead of their rumoured merger.The potential deal also gave UK-listed peer British American Tobacco (BAT) a boost today, given that it owns a 42% stake in Reynolds. There had been speculation earlier in the week that BAT could move to buy up the rest of Reynolds after a standstill agreement expires at the end of the month.Housebuilding and construction-related stocks performed well with Ashtead, Persimmon, Barratt Developments and Berkeley putting in decent gains.Heading the other way were the miners with Randgold, Fresnillo, Antofagasta and Anglo American all trading in the red.Bottling firm Coca-Cola HBC was another high riser after analysts at Goldman Sachs upgraded their rating on the stock to 'buy'. Meanwhile, Dairy Crest was lower after Societe Generale cut its stance on the dairy food products group to 'sell'.FTSE 100 - RisersShire Plc (SHP) 4,870.00p +5.87%Imperial Tobacco Group (IMT) 2,740.00p +3.05%Coca-Cola HBC AG (CDI) (CCH) 1,351.00p +2.97%ITV (ITV) 177.80p +2.36%Experian (EXPN) 1,021.00p +1.79%Friends Life Group Limited (FLG) 325.60p +1.69%Admiral Group (ADM) 1,542.00p +1.45%Aviva (AV.) 490.00p +1.41%Mondi (MNDI) 1,024.00p +1.39%British Sky Broadcasting Group (BSY) 880.50p +1.27%FTSE 100 - FallersRandgold Resources Ltd. (RRS) 5,120.00p -2.20%Fresnillo (FRES) 928.00p -1.80%Intertek Group (ITRK) 2,659.00p -1.48%Johnson Matthey (JMAT) 2,972.00p -1.23%BG Group (BG.) 1,187.00p -1.00%International Consolidated Airlines Group SA (CDI) (IAG) 328.50p -0.96%Persimmon (PSN) 1,242.00p -0.96%Tesco (TSCO) 278.10p -0.93%Burberry Group (BRBY) 1,452.00p -0.82%ARM Holdings (ARM) 844.00p -0.82%FTSE 250 - RisersPace (PIC) 352.40p +4.79%Kier Group (KIE) 1,794.00p +4.61%NMC Health (NMC) 456.70p +3.56%Dunelm Group (DNLM) 790.00p +3.47%Telecom Plus (TEP) 1,218.00p +3.31%Alent (ALNT) 347.90p +3.14%BTG (BTG) 630.00p +3.11%Enterprise Inns (ETI) 122.60p +2.68%Rank Group (RNK) 164.90p +2.42%Regus (RGU) 176.00p +2.33%FTSE 250 - FallersDairy Crest Group (DCG) 440.10p -3.36%Centamin (DI) (CEY) 67.00p -3.32%African Barrick Gold (ABG) 225.30p -3.10%Ophir Energy (OPHR) 205.30p -3.07%Hays (HAS) 124.30p -2.97%Synthomer (SYNT) 212.00p -2.97%AO World (AO.) 229.00p -2.88%Polymetal International (POLY) 564.50p -2.84%Kazakhmys (KAZ) 315.20p -2.72%Grainger (GRI) 213.10p -2.02%AB