Retailers boost FTSE

By David Brett

LONDON (BestGrowthStock) – Britain’s top shares rose on Friday, with retailers lifted by M&A activity, though oil major BP limited the index’s gains as the costs of its oil leak in the Gulf of Mexico neared $1 billion.

By 1051 GMT, the FTSE 100 was up 26.52 points or 0.5 percent at 5,221.69, up for a third day, after it closed up 3.1 percent Thursday, hitting a one-week high, as concerns over the euro zone debt crisis ebbed.

“We have started to see consistent stock demand and a return in appetite for risk which has helped to pick the FTSE 100 up,” Joshua Raymond, market strategist at City Index said.

Morgan Stanley Friday raised its year-end 2010 target for the FTSE 100 to 5,800 from 5,000 in a UK strategy review.

Retailers were among the best performers on the index after mid-cap home improvements retailer Travis Perkins made an indicative 553 million pounds offer for mid-cap plumbing and heating company BSS Group, sparking hopes of more M&A activity in the sector.

Travis Perkins rose 8.9 percent, while BSS soared 35 percent.

Home Retail, owner of Homebase and Argos, and Kingfisher, Europe’s No.1 home improvements retailer, gained 2 and 2.2 percent, respectively.

Other builders merchants were boosted by the consolidation moves in the sector, with blue chip Wolseley up 1.6 percent.

Retailers more generally were helped by bellwether department store John Lewis, which said sales were up an annual 12 percent in the week to May 22.

High street retailer Marks & Spencer Group climbed 2.2 percent as UBS lifted its rating on the retailer to “buy” from “neutral.”

Bullish broker comment helped Thomas Cook Group and TUI Travel up 2 and 2.9 percent, respectively, as Nomura upgraded its rating for both groups to “buy” from “neutral” in a review of the UK leisure sector.

Unilever added 2.2 percent, with UBS raising its rating for the consumer goods giant to “buy” from “neutral” on valuation grounds.

Severn Trent rose 2.9 percent after the water firm reported a 24 percent rise in underlying pretax profit.

BP “TOP KILL” FEARS

BP shed some of the previous session’s gains, down 3.3 percent as it put the cost of tackling the biggest oil spill in United States history at $930 million so far.

The oil major still does not know whether its “top kill” operation designed to plug the leak will be successful.

Royal Dutch Shell rose 0.5 percent. The company said it would pay $4.7 billion in cash to buy privately held East Resources Inc, giving it substantially more exposure to crucial shale gas plays in North America.

Peer BG Group rose 1 percent, helped by a price target hike from UBS.

Prudential shed 0.9 percent as Britain’s largest insurer said it was trying to negotiate a cut in the $35.5 billion it has agreed to pay for AIG’s Asian unit, AIA, amid fears its shareholders might block the deal as too expensive.

Data from across the U.S., including April personal income and consumption data and May New York ISM numbers, May Chicago PMI, and the final reading for May’s University of Michigan consumer sentiment survey, should give further clues as to the state of the World’s biggest economy.

Stock Market Analysis

(Editing by Will Waterman)

Retailers boost FTSE