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Footsie shrugs off China woe on M&A cheer

Published: 13:35 28 Jul 2015 BST

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Takeover activity helped London dealers to brush off Chinese gloom on Tuesday.

The FTSE 100 Index rose 50.58 points to 6555p as Switzerland's Zurich Insurance confirmed speculation that it was considering a possible £5bn takeover bid for RSA.

Proactive Investors last week revealed market talk about a possible bid for the insurer, which has undergone a shake-up under new chief executive Stephen Hester. Names also in the frame included Germany's Allianz and Generali of Italy.

Zurich said in a statement: "Zurich notes the recent market speculation in relation to RSA Insurance Group and confirms that the company is evaluating a potential offer.

"This announcement does not amount to a firm intention to make an offer and there can be no assurance that any offer will be made."

RSA said in a statement: "The board of RSA Insurance Group notes the announcement by Zurich Insurance Group that it is evaluating a potential offer for RSA. RSA has not held talks with or received a proposal from Zurich and shareholders are advised to take no action."

RSA's shares lifted 62p to 499.8p in London. On the Swiss market, shares in Zurich Insurance (VTX:ZURN) fell 3.30 CHF to 293.10 CHF.

Generic drug group Hikma Pharmaceuticals (LON:HIK) also fuelled the upbeat sentiment by agreeing to buy US rival Roxane Laboratories Inc. and Boehringer Ingelheim Roxane Inc, from Boehringer Ingelheim. Hikma's shares rose 164p to 2244p.

Engineering turnaround group Melrose (LON:MRO) chipped in with news that it was selling smart meter maker Elster (NYSE:ELT) for £3.3bn to Honeywell (NYSE:HON).

The takeover talk helped the Footsie to recover from a tough session on Monday triggered by the second biggest fall in Chinese shares since the turn of the century.

Disappointing Chinese economic data on Friday contributed to yesterday's fall but the main catalyst was the fear of a withdrawal of the support measures which have been in place for about three weeks now.

The IMF has also expressed its wish for China to allow market forces to sort things out. Investors around the globe will be watching Chinese markets again today.

In economic news, official figures showed UK growth strengthened in the second quarter thanks to buoyant services activity and resurgent mining and quarrying.

But Lee Hopley, chief economist at the Engineering Employers' Federation, said: "The news wasn’t wholly positive, with manufacturing breaking its run of growth over the past two years with a 0.3% decline in output."

A busy week for corporate news picked up pace with oil titan BP (LON:BP.) reporting lower profits on the back of falling oil prices.

But investors appeared to take a lenient view of the results as boss Bob Dudley vowed to "rebalance" the company in line with the lower prices. Shares in BP rose 6.55p to 393.85p.

Meanwhile, high street favourite Next (LON:NXT) ticked up 155p to 7655p after it increased its profit guidance after a July weather boost.

Next’s shares fell after it reported its full-year results in March but have since rebounded strongly and reached record levels last week.

Regulators delivered a blow to Royal Mail (LON:RMG), sending its shares down 14.2p to 489.8p, after accusing the former state-owned postal operator of discriminating against rivals with planned price changes.

But broadcaster ITV (LON:ITV) advanced 6.9p to 270.6p as it turned in strong first half results.

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