LONDON (ShareCast) - M&A activity was the theme of the day in London on Wednesday as heavyweight stocks British Sky Broadcasting, Severn Trent and Vodafone grabbed the headlines. Nevertheless, after a choppy start, the FTSE 100 managed to register moderate gains by lunchtime.

Helping sentiment this morning was UK unemployment data which showed that the number of people requesting Jobseeker's Allowance dropped by 8,600, compared with forecasts for a 6,500 fall. The jobless rate however was unchanged at 7.8%, as expected.

The Footsie was trading in positive territory by midday, albeit on slightly, rebounding following a 1.0% fall on Tuesday. The index has now dropped nearly 7.0% since hitting a 13-year closing high of 6,840 on May 22nd as speculation increases that the Federal Reserve will soon begin to tighten monetary policy as the economic recovery gathers momentum.

"The importance of a strong performance over the coming period should not be understated for some key markets, as a devaluation following the broken key technical levels seen last week will greatly increase the likeliness of a stock market collapse for the coming months," said Research Analyst Joshua Mahony from Alpari.

"Following double-digit losses seen over recent weeks, the ability of markets to recover to reach new highs will be paramount in trader perception of whether we are now set to see a prolonged bear market or a continuation of the recent market strength."

FTSE 100: Severn Trent, Vodafone and BSkyB making headlines

Water group Severn Trent dropped sharply this morning after the consortium of foreign investors that had bid for the company withdrew its offer last night. LongRiver, after having had its earlier proposals rejected by Severn Trent, said that it would not put forward a further offer "in the absence of meaningful engagement" with the utility's board.

Vodafone was a heavy faller this morning after going ex-dividend (along with Johnson Matthey), though the telecoms giant also confirmed that it has approached Germany cable operator Kabel Deutschland about a possible takeover.

BSkyB was making gains this morning after rumours that part-owner News Corp's plan to split the company into two could lead to a fresh bid for the UK pay-TV and broadband group.

Supermarket giant Sainsbury edged higher after reporting its 34th straight quarter of like-for-like (LFL) sales growth, though the 0.7% increase in LFL sales in the first quarter was a sharp slowdown from the 3.6% growth seen in the preceding quarter. Sector peers Tesco and Morrison were also on shopping lists early on.

Asset manager Aberdeen was a strong riser as investors looked to take advantage of its recent slump.

FTSE 250: Moneysupermarket drops after going ex-dividend

Price-comparison website Moneysupermarket.com was sharply lower this morning given that today is the ex-dividend date for its special interim dividend of 12.92p a share announced last week. This was a way to return £70m to shareholders.

LondonMetric Property, Booker and Intermediate Capital were also in the red after going ex-dividend today.

Heritage Oil surged after saying that the temporary factors that had caused lower-than-expected production at its OML 30 licence in Nigeria have been successfully addressed and that output is back at normal levels.


FTSE 100 - Risers
Aberdeen Asset Management (ADN) 414.90p +4.83%
G4S (GFS) 241.30p +2.55%
BT Group (BT.A) 311.80p +2.23%
Tate & Lyle (TATE) 816.50p +2.13%
British Sky Broadcasting Group (BSY) 793.50p +1.99%
Smith & Nephew (SN.) 752.00p +1.97%
Standard Life (SL.) 369.20p +1.88%
Capita (CPI) 955.50p +1.87%
Carnival (CCL) 2,161.00p +1.69%
Centrica (CNA) 372.40p +1.64%

FTSE 100 - Fallers
Severn Trent (SVT) 1,775.00p -8.36%
Vodafone Group (VOD) 183.55p -4.40%
Randgold Resources Ltd. (RRS) 4,816.00p -2.23%
Fresnillo (FRES) 1,063.00p -1.21%
Evraz (EVR) 115.90p -1.19%
Vedanta Resources (VED) 1,176.00p -1.09%
Eurasian Natural Resources Corp. (ENRC) 236.30p -0.76%
GKN (GKN) 302.10p -0.76%
Schroders (SDR) 2,144.00p -0.69%
CRH (CRH) 1,308.00p -0.68%

FTSE 250 - Risers
New World Resources A Shares (NWR) 99.65p +5.45%
Heritage Oil (HOIL) 143.60p +5.43%
National Express Group (NEX) 215.60p +4.56%
Centamin (DI) (CEY) 37.19p +3.28%
Savills (SVS) 619.50p +3.25%
Menzies(John) (MNZS) 734.50p +3.02%
Hays (HAS) 86.40p +2.98%
Dialight (DIA) 1,191.00p +2.94%
Dixons Retail (DXNS) 42.32p +2.74%
Keller Group (KLR) 950.00p +2.70%

FTSE 250 - Fallers
Moneysupermarket.com Group (MONY) 186.70p -5.94%
Oxford Instruments (OXIG) 1,385.00p -4.81%
Britvic (BVIC) 465.80p -4.25%
LondonMetric Property (LMP) 109.10p -3.96%
BH Macro Ltd. USD Shares (BHMU) 20.75 -2.35%
Carpetright (CPR) 600.00p -2.20%
Hunting (HTG) 785.00p -2.00%
Unite Group (UTG) 343.60p -1.86%
Imagination Technologies Group (IMG) 312.10p -1.82%
Booker Group (BOK) 121.40p -1.78%

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