By Carla Mozee, MarketWatch
U.K. GDP expands 0.7%
U.K. stocks gained Tuesday, with RSA Insurance Group Inc.
rallying on word of a possible takeover bid, but Royal Mail PLC
shares falling after a regulator's rebuke.
Meanwhile, the pound gained ground after growth in U.K. gross
domestic product met expectations.
The benchmark FTSE 100 rose 0.7% to 6,548.62, on track for its
first advance in six sessions. The index on Tuesday was knocked
back 1.1%
(http://www.marketwatch.com/story/ftse-100-falls-as-chinese-stocks-slide-but-miners-hold-to-higher-ground-2015-07-27)
in a global rout of equities sparked by a plunge for Chinese
shares.
A flurry of M&A developments supported British blue-chips on
Tuesday. RSA (RSA.LN) surged 13% after Zurich Insurance Group AG
(ZURN.VX) said it's "evaluating a possible offer"
(http://www.marketwatch.com/story/zurich-confirms-its-considering-an-offer-for-rsa-2015-07-28)
for the British firm. The Swiss insurer said it can't, however,
make assurances that an offer will be presented.
Meanwhile, Hikma Pharmaceuticals PLC (HIK.LN) climbed 7% after
the company said it's buying Roxane Laboratories Inc
(http://www.marketwatch.com/story/hikma-to-buy-roxane-labs-for-up-to-265-billion-2015-07-28).
and Boehringer Ingelheim Roxane Inc. for up to $2.65 billion in
cash and shares. The deal is expected to push Hikma's position in
the U.S. generic drugs market.
In other deal news, GKN PLC (GKN.LN) shares popped up 6.4% after
the engineering company said it will buy Fokker Technologies Group
BV
(http://www.marketwatch.com/story/gkn-to-buy-fokker-as-it-bets-more-on-aerospace-2015-07-28)
for an enterprise value of 706 million euros ($779.98 million) from
private equity owner Arle Capital. "Aerospace has been our top
priority for acquisitions," said GKN Chief Executive Nigel Stein in
a statement.
But at the bottom of the FTSE 100 was Royal Mail (RMG.LN).
Shares fell 3.3% after a regulator, the U.K. Office of
Communications or Ofcom,
(http://www.marketwatch.com/story/royal-mail-breached-competition-law-says-ofcom-2015-07-28)
said the company's changes to wholesale prices for bulk
mail-delivery services, or access services, breached competition
law by discriminating against rival operators.
BP PLC (BP.LN) shares, meanwhile, turned higher by 1.2%. The oil
major swung to a second-quarter loss
(http://www.marketwatch.com/story/bp-swings-to-quarterly-loss-on-lower-oil-prices-2015-07-28),
hurt by lower oil prices and a multibillion-dollar charge relating
to the recent deal to settle claims in the U.S. over the 2010
Deepwater Horizon disaster.
Sterling: The currency rose to $1.5585 after preliminary U.K.
government data showed the economy grew 0.7% in the second quarter
(http://www.marketwatch.com/story/uk-economy-steps-up-a-gear-as-gdp-grows-07-2015-07-28),
and by an annualized rate of 2.8%. Sterling was buying $1.5559 late
Monday in New York.
"This goes some way to supporting the hawkish stance taken by
Bank of England officials last week when referring to the potential
for an interest rate hike by the turn of the year," said Alex
Edwards, currency analyst at UKForex, in a note.
But the central bank still needs to consider that the U.K.
inflation rate "remains close to rock bottom, problems persist
throughout the eurozone, and it's still unclear whether the
[Federal Reserve] will increase U.S. interest rates before the end
of the year," in the wake of turmoil in Chinese stocks, said
Edwards.
The Fed will begin its two-day monetary policy meeting later
Tuesday.
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