FTSE 100 Index Gains; Capita, Punch Taverns, De La Rue Advance

U.K. stocks rose as Capita Group Plc said its chief executive officer bought shares in his firm and as merger and acquisition activity buoyed Punch Taverns Plc and De La Rue Plc.

Capita, which provides a criminal records service for the U.K. Home Office, rallied 5.4 percent after the company said its Chief Executive Officer Paul Pindar bought 150,000 shares at 640 pence each on Dec. 3. Punch Taverns soared 6.6 percent after the Mail on Sunday reported that CVC Capital Partners Ltd. is considering buying the pub owner. De La Rue surged by a record as it rejected an 896 million-pound ($1.4 billion) takeover approach from closely-held rival Francois-Charles Oberthur Fiduciaire SA.

The FTSE 100 advanced 24.96, or 0.4 percent, to 5,770.28 at the 4:30 p.m. close in London. The gauge has rallied 10 percent since the end of August as investors anticipated that the Federal Reserve would step in to buoy the ailing economic recovery. The FTSE All-Share Index gained 0.5 percent today and Ireland’s ISEQ Index rose 0.6 percent.

“Profit margins are set to continue rising,” Mislav Matejka, the head of pan-European equity strategy at JPMorgan Chase & Co., wrote in a report today. We expect “M&A activity to pick up. An asset allocation shift into equities could be a significant positive driver of outperformance next year.”

Federal Reserve Chairman Ben S. Bernanke said the U.S. economy is barely expanding at a sustainable pace and it’s possible policy makers may expand bond purchases beyond the $600 billion announced last month to spur growth.

Bond Purchases

The purchase of more bonds than planned is “certainly possible,” Bernanke said in an interview broadcast yesterday by CBS Corp.’s “60 Minutes” program. “It depends on the efficacy of the program” and the outlook for inflation and the economy.

Capita rallied 5.4 percent to 669.5 pence after the company said that its Chief Executive Officer Paul Pindar bought 150,000 shares at 640 pence each on Dec. 3.

Punch Taverns soared 6.6 percent to 69.25 pence. CVC Capital Partners is considering buying Punch Taverns, the Mail on Sunday reported, without saying where it got the information.

De La Rue surged 30 percent to 841 pence. The world’s biggest printer of banknotes rejected Oberthur’s 905 pence-a- share cash proposal, presented on Nov. 10, the Paris-based company said in a statement today. That offer is 43 percent above the closing price of De La Rue stock that day.

Mouchel, Tesco

Mouchel Group Plc rallied 28 percent to 72.25 pence as the U.K. road and infrastructure-maintenance company said it received approaches which could lead to an offer.

There have been $274.47 billion of mergers & acquisitions in the U.K. this year, according to data compiled by Bloomberg.

Tesco Plc declined 1.6 percent to 420 pence after UBS AG cut its recommendation on the retailer to “neutral” from “buy,” saying growth in the U.K. will be slower over the next 10 years.

Desire Petroleum Plc plunged 50 percent to 67.25 pence as the U.K. energy explorer said the Rachel North well off the Falkland Islands won’t produce oil.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.

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