UPDATE 2-UK mid-caps hit record high on recovery hopes; M&A chatter boosts Meggitt

  • Reuters
  • Stock Market News
UPDATE 2-UK mid-caps hit record high on recovery hopes; M&A chatter boosts Meggitt
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* St. Modwen Properties surges on $1.68 bln buyout offer

* Melrose rises on Morgan Stanley (NYSE: MS ) PT hike

* FTSE 100 up 0.7%, FTSE 250 adds 1.2% (Updates to market close)

By Shivani Kumaresan and Devik Jain

May 7 (Reuters) - Britain's mid-cap index closed at a record high on Friday as hopes of a stronger economic recovery lifted industrial and consumer discretionary stocks, while Meggitt MGGT.L shares soared on a takeover report.

The domestically focused mid-cap FTSE 250 index .FTMC advanced 1.2%, with industrial stocks, including Easyjet Plc EZJ.L , IMI Plc IMI.L and Pagegroup Plc PAGE.L , rising between 2.7% and 5.1%.

The blue-chip index .FTSE rose 0.7%, clocking its best week since April with Melrose Industries MRON.L adding 1.8% after Morgan Stanley raised its price target on the engineer's shares.

Mining stocks, mainly Anglo American (JO: AMSJ ) AAL.L , Glencore Plc GLEN.L and Rio Tinto Plc RIO.L , provided the biggest boost on the index, gaining between 0.7% and 3.6%.

"The solid rise comes after the BoE upgraded its growth forecasts for the UK. Confirmation of stronger growth from the BoE has added to market confidence that the recovery is firmly on track," said Sophie Griffiths, market analyst, UK & EMEA, OANDA.

"With further easing of lockdown measures later this month, economic growth is likely to accelerate."

Both the indexes have gained 10% year-to-date as investors flocked to energy, materials and banking stocks that are seen benefiting the most from a stronger economic recovery due to speedy COVID-19 vaccine rollouts and government policy support.

St. Modwen Properties SMP.L surged 20.0% to the top of midcap index after it received a potential takeover offer from private equity firm Blackstone (NYSE: BX ) BX.N , valuing the property developer at around 1.21 billion pounds ($1.68 billion). jumped 8.3% on a report that U.S. group Woodward Inc WWD.O was looking to acquire the UK aero-engineer. BARC.L gained 2.5% after activist investor Sherborne sold its 6% stake in the company, disbanding its efforts to overhaul the British bank.

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