FTSE higher as bid talk spurs gains

London equities rose on Friday, supported by fresh bid talk and a resurgent mining sector.

The FTSE 100 started the session 0.7 per cent stronger at 6,521.9, a rise of 42 ½ points.

Dealing room rumour of bid interest in Carphone Warehouse sent shares in the retailer to the top of the index, up 6 per cent to 352p on talk that existing investor Best Buy (NYSE:BBY) of the US was poised to increase its stake.

Mining stocks took their turn to make gains on the outlook for robust commodities prices. Xstrata rose 1.9 per cent to £36.39, with Lonmin up 0.9 per cent at £32.30 and Rio Tinto 1.7 per cent higher at £54.68.

Continuing weakness among mid-cap investment companies, unsettled by the uncertain market outlook for 2008, continued to weigh on the FTSE 250, down a further 0.4 per cent to 10,496.0 after losses of more than 1 per cent during the previous session.

Investors were waiting for a sense of direction from closely-watched US employment data, due out at 1.30pm London time. The report was expected to offer insight into the timing of the Federal Reserve's rate-cutting cycle, as well as the prospects for a recession in the world's biggest economy. Economists forecast the creation of 70,000 jobs in December.

On the downside, Cairn Energy lost 1.5 per cent to £29.03 after disappointing news from one of its oil and gas prospects in Bangladesh. The company confirmed it had abandoned a potential well in the region after it came up dry.

Retailers failed to receive a lift from news of strong festive sales at unlisted high street bellwether John Lewis. The department store chain reported an 8 per cent increase in sales in the week to December 29.

But investors stayed cautious on the sector after DSG International (NASDAQ:DSGIF)'s profit warning on Thursday and news of lower like-for-like sales at fashion chain Next, down a further 2.1 per cent at £15.19. DSG was 1.3 per cent lower at 77p. Marks & Spencer lost 1.8 per cent to 533p.

Elsewhere on the High Street, jewelery retailer Signet Group was 5.5 per cent weaker at 60½p after Credit Suisse cuts its price target on the stock to 65p from 75p, holding its "neutral" rating.