London close: Stocks gain as bond yields ease, but political uncertainty remains

(Sharecast News) - London's stock market pushed higher for the second straight session on Thursday, helped by a calmer day on bond markets and a strong start on Wall Street, where a resurgence in AI positivity propelled US indices to new records. The FTSE 100 finished 0.4% higher at 10,363.35, having now risen in three of the past four sessions. However, the FTSE 250 surged 1.3% as M&A speculation drove share prices of two of its constituents up around 50%.

Helping sentiment in London was the lower cost of government borrowing, with 10-year Gilt yields down 9.1 basis points at 4.993%, dipping below the 5% mark after hitting their highest since 2007 on Tuesday. The yield on a 30-year Gilt was down 10.8bp at 5,651%, having reached its highest since 1998 earlier in the week.

Despite the drop in yields, however, analysts warned that the UK was not out of the woods, given the recent rise in political uncertainty following Labour's disastrous local election results last week.

There was more drama in Westminster on Thursday after West Streeting quit his post. The health secretary said it was "now clear" that unpopular prime minister Keir Starmer would not lead the Labour Party into the next general election and called on him to stand down to allow a leadership contest.

"Heightened speculation of a leadership challenge this week has left the bond market dazed and confused. Bond investors do not like uncertainty, and there is a strong possibility we're facing a seismic shift in the outlook for politics over the coming decades," Dan Coatsworth, head of markets at AJ Bell.

Nevertheless, supporting bond prices on Thursday was the news that UK GDP increased by 0.6% in January to March, following a revised 0.2% uplift in the fourth quarter, helped by a strong performance from the services sector.

Also lifting market sentiment were yet more record highs for the S&P 500 and Nasdaq after the opening bell in New York, as an ongoing boom in AI-adjacent sectors lifted corporate earnings and boosted risk appetite among investors.

"So long as the AI mania persists, and US earnings remain at their impressive level, it seems unlikely that markets will begin to worry about rising yields and surging energy costs. So long as the music keeps playing investors will have to chase the moves in equity markets, continuing the feedback loop that has driven such a rapid recovery," said Chris Beauchamp, chief market analyst at IG.

L&G, Spire and Tate & Lyle jump

Legal & General was the top riser on the FTSE 100 index following a report that potential bidders, including insurers and alternative asset managers, had been running the rule over the business. The Financial Times quoted a US private capital executive as saying that it was "getting pretty real" as far as groups drawing up plans to bid for L&G. "People are spending real money on this now," the source said. The stock was 6%.

On the FTSE 250, UK private hospital group Spire Healthcare soared by nearly 50% after confirming it had received a £1bn buyout bid from Toscafund Asset Management. The 250p-a-share proposal represents a premium of about 66% to Spire's last closing price, Spire said, adding that it would recommend it to shareholders if a formal offer was tabled.

Tate & Lyle also surged by nearly 50% as it confirmed it is in talks with US rival Ingredion about a possible takeover at 615p per share, valuing the company at £2.7bn. "The board and Ingredion are in discussions regarding the proposal," it said, adding that there can be no certainty that any offer will be made.

3i Group tanked 13% as the private equity and infrastructure investment firm pointed to slowing sales at its biggest holding, Dutch discount retailer Action.

Burberry was also in the red, falling 6% despite it hailing a "meaningful inflection point" as it swung to a full-year profit, underpinned by growth in the Americas and China. Investors were left disappointed by a weaker performance in the Middle East and a cautious outlook.

Coca-Cola HBC, BP and Pershing Square all fell as they traded without entitlement to the dividend.

Market Movers

FTSE 100 (UKX) 10,363.35 0.37% FTSE 250 (MCX) 22,828.07 1.33% techMARK (TASX) 5,920.91 0.51%

FTSE 100 - Risers

Legal & General Group (LGEN) 263.80p 6.40% British American Tobacco (BATS) 4,962.00p 4.33% Imperial Brands (IMB) 2,866.00p 4.10% Admiral Group (ADM) 3,294.00p 3.85% Halma (HLMA) 4,694.00p 3.25% Whitbread (WTB) 2,340.00p 3.04% Marks & Spencer Group (MKS) 320.50p 2.96% Compass Group 11 (CPG) 33.31p 2.81% St James's Place (STJ) 1,192.50p 2.80% Barclays (BARC) 434.70p 2.77%

FTSE 100 - Fallers

3i Group (III) 2,112.00p -12.76% Burberry Group (BRBY) 1,083.00p -6.84% Babcock International Group (BAB) 975.40p -3.53% Coca-Cola HBC AG (CDI) (CCH) 4,172.00p -2.16% Tesco (TSCO) 450.70p -2.14% Antofagasta (ANTO) 4,267.00p -2.09% Fresnillo (FRES) 3,707.00p -2.03% Pershing Square Holdings Ltd NPV (PSH) 4,060.00p -1.60% Rio Tinto (RIO) 8,154.00p -1.39% International Consolidated Airlines Group SA (CDI) (IAG) 384.40p -1.35%

FTSE 250 - Risers

Spire Healthcare Group (SPI) 224.50p 49.27% Tate & Lyle (TATE) 545.00p 47.01% Watches of Switzerland Group (WOSG) 633.00p 18.64% Ithaca Energy (ITH) 279.40p 6.56% Dr. Martens (DOCS) 64.40p 6.10% IntegraFin Holding (IHP) 338.50p 4.96% Aston Martin Lagonda Global Holdings (AML) 49.32p 4.76% Marshalls (MSLH) 135.40p 4.56% CVS Group (CVSG) 1,197.00p 4.27% Allianz Technology Trust (ATT) 699.00p 3.71%

FTSE 250 - Fallers

Pagegroup (PAGE) 118.10p -5.29% Hochschild Mining (HOC) 658.00p -3.66% Drax Group (DRX) 847.00p -2.70% Harworth Group (HWG) 126.20p -2.62% Hays (HAS) 30.20p -2.52% Fidelity China Special Situations (FCSS) 298.50p -2.29% Ceres Power Holdings (CWR) 728.00p -2.22% HGCapital Trust (HGT) 344.00p -2.13% Greencoat UK Wind (UKW) 99.80p -1.77% Oxford Biomedica (OXB) 619.00p -1.75%