Takeover rumours boost market

The FTSE 100 Index up 42.6 points to 4590.1 in mid-morning trading

Hopes of major takeovers in the transport and mobile phone sectors helped provide direction for the London market.

FirstGroup's pursuit of a possible merger with fellow FTSE 250 Index firm National Express boosted shares in its rival and caused other firms in the sector to surge today.

Vodafone's reported interest in a bid for T-Mobile UK also attracted attention in the top flight, with the FTSE 100 Index closing up 53 points at 4294.

A positive start to trading on America's Dow Jones Industrial Average saw the Footsie gain momentum late in the session, having earlier struggled to move away from its opening mark.

Oil prices moving above 71 US dollars a barrel added to the positive sentiment.

But it was a potential takeover of T-Mobile by Vodafone that provided much of the interest on the Footsie. Such a deal would give Vodafone 40% of the UK market by revenue - propelling it into pole position above rival O2. However, this was not enough to inspire its share price, which edged just 1% or 1.4p higher to 117.6p.

An upgrade also lifted car insurance group Admiral, ahead 27.5p to 883.5p, while life and pensions firm Prudential recovered from weakness last week to add 23.5p to 422.75p. Aviva climbed 11.25p to 341.5p.

In the second-tier, debt-laden National Express surged 10% or 27p to 302.75p after it said it had rebuffed the approach from FirstGroup. The interest boosted hopes of consolidation in the sector, with Arriva ahead 9.75p at 422p and Stagecoach up 2.25p at 127p.

Southern franchise owner Go-Ahead lost an earlier gain to fall 6p to 1231p, while FirstGroup retreated to 4.75p lower at 366p after its takeover target said it did not consider it appropriate to enter talks with its larger suitor "at present".

The biggest Footsie risers were Lloyds Banking Group up 4.07p at 70.56p, Prudential ahead 23.5p at 422.75p, Rio Tinto up 93p at 2153p and Barclays up 11.55p at 279.65p. The biggest Footsie fallers were 3i Group down 5p at 237.5p, Xstrata off 13.9p at 672.1p, Thomas Cook Group down 3.85p at 199.9p and British Airways down 1.8p at 127.5p.