LONDON (Reuters) - The FTSE 100 edged higher on Monday, with healthcare and media sectors bolstered by transatlantic merger activity, helping outweigh a steep sell off in Barclays.
Drugmaker Shire - long viewed as a takeover target - added 2.4 percent after U.S. generic rival Perrigo agreed to buy Ireland’s Elan for $8.6 billion.
A proposed merger between Publicis and Omnicom to create the world’s biggest advertising agency, meanwhile, buoyed British peer WPP up 0.6 percent.
Analysts at Credit Suisse said M&A activity in Europe is up on last year, recommending a basket of 17 stocks that are potential takeover targets, 10 of which are British. They included seller of luxury raincoats and leather goods Burberry and software company Sage.
Anticipation of future deals helped the FTSE 100 close up 5.46 points or 0.1 percent at 6,560.25 points.
“People have been predicting this for the last two or three years ... but the difference is that there is enough confidence now that you’ll actually be able to make a return on the cash to make it worthwhile,” said Peter Botham, chief investment officer at private bank Brown Shipley.
“I think it will be across the board ... You can pick the obvious one like pharmaceuticals and IT, but most sectors have got companies with pretty strong balance sheets.”
General retailers also held up well, with Next up 1.1 percent and Marks & Spencer adding 0.6 percent after Confederation of British Industry data showed retail sales growing at their fastest pace since January.
“If you are fund manager, I think it’s right to be looking at UK-centric situations rather than global,” Tim Steer, fund manager at Artemis, said. He said that of the top 30 most attractive UK stocks his models showed that 19 were focused on the UK economy.
On the downside, Barclays, the 13th biggest company in the index, retreated 3.5 percent after saying it will give an update on Tuesday on plans to meet tough new UK rules that could include a multi-billion pound share issue to help plug a capital shortfall.
Editing by Jane Merriman