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Reuters: FTSE gains as miners, M&A lend support; data eyed: ‘Shell… could face punitive sanctions over investments in Iran

EXTRACT: In related news, the Times reported Shell, HSBC and Standard Chartered Bank could face punitive sanctions over investments in Iran from American authorities, under proposed legislation expected to be approved by Congress in the coming months.

Fri 20 Jul 2007, 7:15 GMT
By Michael Taylor

LONDON (Reuters) – The FTSE 100 of Britain’s leading shares edged up early on Friday as miners and M&A activity continued to support despite a lack of corporate and economic data.

At 0730 GMT the UK’s main share index was 26.4 points, or 0.4 percent, higher at 6,666.6 with investors looking to preliminary UK second-quarter economic growth data due at 0830 GMT for further market direction.

Mining shares buoyed the market with BHP Billiton, the world’s largest miner, rising 1.6 percent after media reports that it is no longer considering making an offer for Alcoa.

And with base metal prices rising, other miners lending support included Antofagasta, Rio Tinto and Anglo American.

Johnson Matthey added 1.9 percent after Citigroup raised its price target to 2,000 pence from 1,800 pence with a “buy” rating.

In retailers, J Sainsbury gained 0.3 percent after news Qatar’s state investment fund is considering a 10.4 billion pounds bid for Britain’s third-biggest supermarket chain, with plans to invest 3.5 billion pounds in the grocer.

Qatar’s Delta Two investment fund, which already holds a 25 percent stake, has proposed paying 600 pence per share, excluding a 7.35p dividend, it said a statement.

On the M&A front, ABN AMRO’s long-held opposition to breaking up the Dutch bank may be starting to soften after it demanded detailed discussions with the Royal Bank of Scotland-led (RBS) consortium next week, the Financial Times said.

RBS added 0.2 percent, while rival bidder Barclays was flat.

The economy was also in focus.

“The Bank of England has given us 125 basis points of (rates) tightening but as yet there is very little sign of it in the economy as an effect, apart from perhaps the housing market,” said Karen Ward, an economist at HSBC. “We’re all really on tenterhooks waiting for the economy to slow down, which most economists predicted would have happened by now.”

“We’ve had an important week of data this week which still shows a small slowdown in retail spending but nothing dramatic. Maybe it’s fixed rate mortgages, and perhaps we’ll see something abrupt later in the year, but certainly as yet the economy is holding up pretty well.”

OILS STEADY

London Brent crude was steady above $77 a barrel after two days of solid gains, buoyed by concerns that unrelenting economic growth will strain supplies already thinned by U.S. refinery trip-ups and African export disruptions.

Index heavyweight BP gained 0.3 percent, while rival Royal Dutch Shell rose 0.4 percent.

In related news, the Times reported Shell, HSBC and Standard Chartered Bank could face punitive sanctions over investments in Iran from American authorities, under proposed legislation expected to be approved by Congress in the coming months.

Among telecoms, Cable and Wireless dipped 0.6 percent ahead of its annual general meeting. The Times said a controversial remuneration scheme at C&W looked set to be waved through at the meeting, despite rebellion from some shareholders.

Kingfisher tacked on 1.5 percent after Deutsche Bank raised its rating to “hold” from “sell”.

In midcaps, private equity company Terra Firma said over a quarter of EMI Group shareholders had accepted its 2.4 billion pound takeover offer, days after two potential rival bidders withdrew. EMI gained 0.3 percent.

Shares in Debenhams fell 2.5 percent after Icelandic investment group Baugur, which has been building a stake, said it has no plans to make an offer for the department store group.

“We did not believe that Baugur was doing anything other than building a stake at present, it is occupied with re-jigging House of Fraser,” Seymour Pierce analyst Richard Ratner said in a broker note.

© Reuters 2007. All Rights Reserved.

http://africa.reuters.com/business/news/usnBAN029730.html

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