CNBC- Leading shares opened firmer as Wall Street closed higher with Northern Rock a major gainer in the blue chips on reports of a bid approach from Spanish businessman Jose Maria Ruiz-Mateos and that the group is opening its books to hedge funds. At 8.56 am, the FTSE 100 index opened 54.9 points higher at 6,488.6 having closed last night 36.1 points higher at 6,433.0, while the FTSE 250 index was 155.4 points ahead at 11,044.2. Volume was average with 279 mln shares changing hands in 57,818 deals.
“It is good news we are in positive territory as investors realise the sell off has been overdone,” said Peter Dixon, UK economist at Commerzbank.
“However, we do not see the banking sector as particular attractive over the next six months as credit growth and consumption slows this will mean less profit for the banks,” added Dixon. Overnight in Wall Street stocks rose soundly following word that some of the problems dogging big companies like General Motors Corp. and Bear Stearns Cos could be on the mend.
GM, one of the 30 stocks that makes up the Dow Jones Industrial average index, led the market higher from the outset with news it had struck a tentative contract agreement with the United Auto Workers that could allow the company to shed some of its burdensome health care costs.
While stocks held onto gains throughout the session, rumours that Bear Stearns Cos would sell a stake in the company took on new urgency in the final hour of trading with a report that billionaire investor Warren Buffett was a potential suitor.
