London close: Stocks rise with deal news in focus

(Sharecast News) - London markets ended Thursday in positive territory, with deal activity providing a significant boost to specific sectors.

The FTSE 100 index inched up 0.08% to close at 8,281.22, while the FTSE 250 outperformed with a 0.78% rise to finish at 20,762.78 points.

In currency markets, sterling was last up 0.06% on the dollar to trade at $1.2687, as it rose 0.17% against the euro, changing hands at €1.2021.

"It is getting to the point where European markets only make gains when the US is out of the picture," said IG chief market analyst Chris Beauchamp.

"Europeans always seem to take over some of America's positive outlook on life on days like today, with indices moving modestly higher.

"The DAX is higher, and even the beleaguered CAC 40 is rebounding slightly, but the political crisis in France has not gone away, and threatens to unleash fresh volatility on global markets."

Beauchamp noted that the prospect of more merger and acquisition activity in the insurance sector had failed to spark a substantial rally for the FTSE 100, adding that in the short-term, the upside for the index looked limited given the near-300 point gain in two weeks.

"Aviva's bid for Direct Line might signal the beginning of a more activist phase for undervalued UK stocks, helped along by the renewed weakness in sterling versus the dollar."

UK consumer confidence shows little improvement, car manufacturing contracts

In economic news, UK consumer confidence showed little improvement following the Budget, as persistent concerns about the economy tempered gains in personal finance expectations.

According to the British Retail Consortium, sentiment around personal finances for the next three months ticked up to -3 in November from -4 in October, while spending expectations nudged higher to 3 from 2.

However, broader economic confidence weakened further, slipping two points to -19, reflecting unease about the UK's economic outlook.

"There was little shift in consumer confidence since the Budget, with many worried about the economy in the lead up to Christmas," said Helen Dickinson, chief executive of the BRC.

"While there was a very slight improvement in people's expectations of their personal financial situation, this was offset by declining expectations of the wider economy.

"The last month clearly did little to shift the dial for households, either positively or negatively."

The UK car industry meanwhile reported another sharp contraction, with October's vehicle output falling 15.3% year-on-year to 77,484 units, marking eight consecutive months of decline.

Domestic production dipped 4.7%, while exports plunged 17.6%, driven by a 34.6% fall in shipments to the EU.

However, exports to the US surged 96.2%, fueled by demand for luxury vehicles.

Electrified vehicle production also fell, dropping 32.6% despite accounting for nearly a third of output.

Year-to-date, overall production is down 10.8%, with exports down 14.8%, equivalent to 90,000 fewer vehicles shipped.

The Society of Motor Manufacturers and Traders highlighted challenges including soft EV demand and high operational costs, warning that output forecasts for 2025 remain far below pre-pandemic levels.

"These are deeply concerning times for the automotive industry, with massive investments in plants and new zero emission products under intense pressure," said SMMT chief executive officer Mike Hawes.

"Slowdowns in the global market - especially for EVs - are impacting production output, with the situation in the UK particularly acute given we have arguably the toughest targets and most accelerated timeline but without the consumer incentives necessary to drive demand."

On the continent, eurozone economic sentiment edged up unexpectedly in November.

The European Commission's economic sentiment indicator rose 0.1 points to 95.8, surpassing forecasts of a decline to 95.1, though still below its long-term average.

Gains in France, Spain, and the Netherlands were offset by declines in Germany and Italy.

Meanwhile, employment expectations softened slightly, as construction and retail managers became less optimistic about hiring.

Germany's inflation rate meanwhile climbed to 2.2% in November, up from 2% in October, driven by core inflation - which excludes food and energy - rising to 3.0%.

In France, government bond yields briefly exceeded those of Greece for the first time, reflecting rising political tensions.

French 10-year yields hit 3.022% early Thursday before easing to 2.978%, closely aligned with Greece's 2.987%.

Investor concerns about potential political upheaval and budget disputes pushed the yield gap with German bonds higher.

Deal activity news flows with insurance sector in focus

On London's equity markets, waste management firm Renewi soared 46.75% after confirming it was inclined to recommend a £700m takeover proposal from Macquarie Asset Management, should the offer become formal.

The Australian investment firm proposed 870p per share in cash, representing a 57% premium to Renewi's closing price on Wednesday.

Direct Line Insurance Group surged 41.4% following news that it had rejected a £3.3bn takeover proposal from Aviva.

The offer, valued at 250p per share, was dismissed as "highly opportunistic" and "substantially undervaluing" the company.

Analysts at Jefferies noted the possibility of a revised bid, marking the third takeover attempt for Direct Line this year after previous approaches from Belgium's Ageas.

"Given that this is a relatively small uplift from the previous two offers, and the consideration is similarly split between cash and shares, we are unsurprised that the bid was rejected," Jefferies said.

"Previously, we suggested that the capital and expense synergies available to an acquirer mean that an offer of at least 270p would be more realistic.

"With this in mind, while we agree with Direct Line's rejection of the offer, we do believe that a higher offer might be forthcoming if the board considered engaging with Aviva."

Insurance stocks showed mixed performance - Admiral Group gained 3.04%, buoyed by the broader sector activity, while Aviva fell 2%, reflecting investor caution over the rejected bid.

Spirax Group rose 3.77% after receiving upgrades from BNP Paribas Exane and Citi, which also initiated Smiths Group at 'buy', helping Smiths to gain 0.47%.

Retail giants J Sainsbury and Tesco climbed 3.08% and 2.01% respectively, following double upgrades by JPMorgan Cazenove to 'overweight'.

Dr Martens jumped 12.93% despite reporting a swing to a half-year loss, as it reassured investors with encouraging autumn trading and steady guidance for fiscal 2025.

EasyJet added 3.05% after RBC Capital Markets raised its price target on the airline, though it maintained a 'sector perform' rating.

On the downside, Ithaca Energy tumbled 13.98%, trading ex-dividend.

Other stocks trading ex-dividend included Imperial Brands, down 2.35%, Land Securities, off 2.57%, United Utilities, down 0.48%, and Severn Trent, lower by 0.94%.

Cranswick meanwhile slipped 0.6% after being downgraded by RBC Capital Markets.

Tullow Oil slid 7.89% after announcing that while full-year production was on track, free cash flow would fall below earlier guidance due to delayed payments.

Energean lost 8.86%, citing lower-than-expected full-year production despite improved quarterly earnings and output.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,281.22 0.08% FTSE 250 (MCX) 20,762.78 0.78% techMARK (TASX) 4,707.49 0.27%

FTSE 100 - Risers

Spirax Group (SPX) 7,160.00p 3.77% Sainsbury (J) (SBRY) 261.20p 3.08% Admiral Group (ADM) 2,539.00p 3.04% easyJet (EZJ) 552.40p 2.64% Entain (ENT) 804.80p 2.45% Barclays (BARC) 265.10p 2.37% Tesco (TSCO) 366.20p 2.32% International Consolidated Airlines Group SA (CDI) (IAG) 260.80p 2.16% SSE (SSE) 1,785.00p 1.91% Centrica (CNA) 128.50p 1.90%

FTSE 100 - Fallers

Vistry Group (VTY) 652.50p -3.85% Land Securities Group (LAND) 606.00p -2.57% Imperial Brands (IMB) 2,573.00p -2.35% Aviva (AV.) 479.50p -2.00% Frasers Group (FRAS) 738.00p -1.93% Berkeley Group Holdings (The) (BKG) 4,210.00p -1.68% Reckitt Benckiser Group (RKT) 4,858.00p -1.64% Persimmon (PSN) 1,248.00p -1.50% Haleon (HLN) 374.80p -1.32% Croda International (CRDA) 3,443.00p -1.15%

FTSE 250 - Risers

Renewi (RWI) 813.00p 46.75% Direct Line Insurance Group (DLG) 224.40p 41.40% Dr. Martens (DOCS) 65.65p 13.58% TI Fluid Systems (TIFS) 189.20p 5.70% Raspberry PI Holdings (RPI) 353.20p 5.43% W.A.G Payment Solutions (WPS) 84.00p 5.00% Auction Technology Group (ATG) 528.00p 4.14% OSB Group (OSB) 396.80p 3.55% Close Brothers Group (CBG) 220.80p 3.27% Paragon Banking Group (PAG) 746.00p 3.09%

FTSE 250 - Fallers

Ithaca Energy (ITH) 107.00p -13.98% Energean (ENOG) 998.00p -8.86% Foresight Group Holdings Limited NPV (FSG) 420.00p -6.67% PayPoint (PAY) 824.00p -2.49% Bellway (BWY) 2,480.00p -2.13% Ocado Group (OCDO) 318.40p -2.03% Target Healthcare Reit Ltd (THRL) 84.00p -1.65% Volution Group (FAN) 560.00p -1.58% AO World (AO.) 106.80p -1.48% Endeavour Mining (EDV) 1,549.00p -1.46%