FTSE rallies helped by M&A activity

* FTSE up 0.2 pct boosted by M&A activity

* Vedanta bids for controlling stake in Cairn India

* Aviva rebuffs RSA

By David Brett

LONDON, Aug 16 (BestGrowthStock) – Britain’s top shares rose on
Monday, led by commodity stocks as Vedanta Resources (VED.L: )
made its play for a controlling stake in Cairn India (CAIL.BO: ),
and on hopes of stronger demand from China.

By 0756 GMT, the FTSE 100 (.FTSE: ) was up 8.83 points, or 0.2
percent, at 5,284.27, having closed up 0.2 percent at 5,275.44,
on Friday.

India-focused miner Vedanta Resources rose 2.7 percent as
investors liked its deal to buy 51-60 percent of Cairn India for
about $8.5-9.6 billion in cash to be funded with debt and cash.

Edinburgh-based Cairn Energy (CNE.L: ), which holds 62.4
percent of Cairn India, added 2.4 percent.

“This M&A activity could signal something more positive,”
said Richard Hunter, head of UK Equities at Hargreaves Lansdown
Stockbrokers.

“Companies are building strong balance sheets and seeing
some recovery in income without translating that into employing
more staff or spending it on IT, so that could be a positive
indicator going forward.”

Meanwhile, British insurer Aviva (AV.L: ) gained 0.7 percent
after it confirmed it had rejected an approach from rival RSA
(RSA.L: ), which was offering to buy its general insurance
businesses in the UK, Ireland and Canada for 5 billion pounds
($7.8 billion) in cash.

Aviva said it received the conditional proposal on July 28
and told RSA on Aug 6 that it felt the offer was unacceptable.

RSA was the top FTSE 100 faller, down 0.9 percent.

COMMODITY RALLY

The mining sector also received a boost as Credit Suisse
said in a note that it saw stronger future demand from China,
which it believes “is on the cusp of a rebound in after nearly a
year of sharp slowing”.

London copper futures posted a 1.1 percent rise on Monday
and Shanghai metal reversed early losses to end flat, rebounding
after worries about Japanese and U.S. growth gave way to a more
bullish view of supply and demand. [ID:nSGE67F074]

Rio Tinto (RIO.L: ) and Xstrata (XTA.L: ) two of Credit Suisse’s
favoured mining large cap plays climbed 1.5 and 1.7 percent
respectively.

Gold miners African Barrick Gold (ABGL.L: ) and Randgold
(RRS.L: ) rose 1.4 and 1.1 percent respectively, as investors
continued to seek the safe haven characteristics of the precious
metal (XAU=: ).

Energy stocks were mainly on the front foot along with a
rallying crude (CLc1: ) price. BG Group (BG.L: ) rose 0.7 percent
and Royal Dutch Shell (RDSa.L: ) was up 0.1 percent.

However, BP (BP.L: ) bucked the trend, falling 0.6 percent on
news Alabama is suing the oil major, Transocean (RIG.N: ) and
Halliburton (HAL.N: ) for “catastrophic harm” caused in the Gulf
of Mexico oil spill, the state’s attorney general said on
Friday. [ID:nN13196626]

The FTSE, over the course of last week, shed 1.1 percent,
and gains remained tempered as worries over the outlook for
economic recovery were still firmly in investors’ minds.

UK equity trading volumes are this year on track to hit
their lowest point, relative to the value of the market, since
2002, research released on Monday showed, with investors
cautious about the state of the economy. [ID:nLDE67C0PP]

Asking prices for homes in England and Wales fell by 1.7
percent in August after an oversupply of property coincided with
a seasonal dip in demand, property website Rightmove said on
Monday.

Prices fell by their biggest margin since a 2.2 percent
decline recorded in December, another period when the holiday
season depresses prices. [ID:nLDE67C0VS]

There is no further important economic data due out in the
UK on Monday.

(Editing by Sharon Lindores)

FTSE rallies helped by M&A activity