LONDON (Reuters) - UK shares fell slightly on Monday following a strong run, while a potential bidding war for IWG (IWG.L) triggered a surge in the serviced office provider’s stock, the latest deal in a flurry of mergers and acquisitions.
The index of leading UK stocks .FTSE fell nearly 0.2 percent, weighed down by financials and by a rising pound, which typically weighs on dollar-earning companies, while the broader FTSE 250 .FTMC, which includes IWG, added 0.1 percent.
The FTSE 100 recorded a seventh straight week of gains on Friday, its longest winning streak since June 2015, as investors began to warm to UK equities amid a wave of deals and takeovers.
Morgan Stanley on Monday upgraded its view on British equities, saying the market should benefit from higher commodity prices and an increase in dealmaking activity despite economic uncertainty over Brexit.
“The UK market is a fertile ground for stock pickers, given a combination of low valuations and increasing corporate activity/activism,” the U.S. bank’s strategists said.
Shares in IWG were up 22.8 percent after the workplace provider attracted takeover approaches from three rival suitors, potentially plunging the $3.1 billion company into a bidding war.
On Friday, ZPG ZPG.L, the owner of property websites Zoopla and PrimeLocation, surged 30.2 percent to a record high after U.S. private equity firm Silver Lake Management offered 490 pence per share for the company, valuing it at 2.2 billion pounds.
Bookmakers Paddy Power (PPB.L) (PPB.I), William Hill (WMH.L) and GVC (GVC.L) rose between 7 and 11 percent as investors bought into the sector after the U.S. Supreme Court paved the way for states to legalise sports betting.
“Fair to say that market reaction has been extremely upbeat,” said Neil Wilson, chief market analyst at Markets.com.
Elsewhere, British Gas owner Centrica (CNA.L) which reaffirmed its 2018 targets, citing higher energy demand from colder-than-usual weather, was up 1.4 percent.
TalkTalk Telecom Group (TALK.L) added 0.4 percent after a report in Britain’s Telegraph newspaper said it was working with Virgin Media on a deal to share the cost of new ultrafast broadband networks and dial up the pressure on BT Group (BT.L). The latter was down 2.4 percent.
Oil stocks reversed earlier losses after crude oil prices rose as OPEC reported that the global oil glut has been virtually eliminated.
Reporting by Julien Ponthus; Editing by Alison Williams