FTSE 100 close: Rio, ICH, Cadbury up

By ADRIAN LOWERY
Updated: 12:30 EDT, 8 September 2009

UK shares continued their strong run today, bringing the FTSE 100 index within sight of the 5,000 level.

The FTSE 100 was up 14.16 points at 4,947.34. Miners were behind much of the gains, as gold rose above $1,000 an ounce, and the market was generally perked up by the Kraft move for Cadbury.

'There's a sea-swell of bid expectation following on from Cadbury, and Cadbury itself is obviously giving a bit of a plus there,' said Howard Wheeldon, strategist at BGC Partners.

However he sounded a note of caution on the outlook for the equity market.

'We had a mini correction last week. That's not the end of it ... there's still a reality check to come,' he said. US markets were closed yesterday, so UK investors will be looking to the Wall Street open later for confirmation of sentiment.

Cadbury shares took on another 3p to 786p – after a 38% rise yesterday - amid expectation that Kraft, or a rival group, will come in with a bid in excess of £11bn.

Cazenove analysts said Nestle might make a counterbid for Cadbury, perhaps in a joint approach with US chocolate group Hershey. Nestle CEO Paul Bulcke declined to comment directly but said the company had no major acquisitions planned but was always open to opportunities.

Miners added the most points to the index, however. Gold miner Randgold Resources cheered as gold jumped through the $1,000 barrier: its shares were up 135p to 4,354p.

Rio Tinto revealed it was on course to beat its iron ore production target for the year, and its shares lifted 87.5p to 2,552p. Kazakhmys was another big gainer – 65p higher to 1,078p - as was BHP Billiton, which rose 42.5p to 1665.5p.

Meanwhile, Vodafone shares were 1.71% higher, up 2.3p to 136.8p, after France's Orange and T-Mobile announced plans to join forces, possibly sparking further consolidation in the sector.

B&Q owner Kingfisher saw its shares rise 1p to 218p, after it disclosed half-year profits were likely to be in the region of £285m and £290m. This was better than previously forecast in the City.

The news, which was released ahead of schedule due to the inadvertent release of data, lifted shares across the retail sector with Argos owner Home Retail Group ahead 2.4p at 327.9p and Next 32p stronger at 1746p.

However, it was InterContinental Hotels that topped the FTSE 100 leaderboard, with a 42p or 5.47% gain to 810p, after Credit Suisse upgraded the company to 'outperform' from 'neutral' and increased its target price to 910p.

The bank said that ICH is the best placed among large European hotel stocks to benefit from a likely recovery in demand, particularly in the United States.

British Airways shares were 5% higher, up 8.2p to 201p, after Deutsche Bank started coverage of the stock with a hold rating.

In the FTSE 250 index, pubs group Greene King lifted 2.5p to 482.9p after it disclosed stronger-than-expected trading in the 17 weeks to August 30.