Earlier, Hong Kong led a rally across most Asian markets as traders brushed off a slowdown in the US economy, while the boost from last week’s historic North-South Korea summit continued to support Seoul and the won.
“A genuinely game-changing deal in the supermarket sector was the main highlight” for London’s benchmark FTSE 100 index, said Spreadex analyst Connor Campbell.
London’s FTSE 100 gained 0.9% to 7,509.30, Frankfurt’s DAX 30 was up 0.3% to 12,612.11 and Paris’s CAC 40 climbed 0.7% at 5,520.50 at yesterday’s close.
Britain’s second and third biggest supermarket chains Sainsbury’s and Walmart-owned Asda have agreed to merge, the pair said yesterday, hoping to create a £13bn ($18bn) retail king and leapfrog UK number one Tesco.
Sainsbury’s stock shot up 14.5% to 309.00 pence, while Tesco slid 0.9% to 235.90 pence. Asda is not listed.
Walmart shares rose 2.3% in New York to $89.32.
“The reduced competition, pricing advantage from greater market share, the large ‘cost synergies’ and cash from property sales all make this deal attractive for shareholders,” said market analyst Jasper Lawler at London Capital Group.
But shares in T-Mobile and Sprint tumbled as investors worried about the chances of US regulators allowing the number of national network operators to drop to three.
T-Mobile shares fell 6% to $60.63 while Sprint shares tanked 13.4% to $5.63.
A previous effort by the firms to merge in 2014 was abandoned after the Obama administration signalled it was unlikely to approve.
Meanwhile Marathon petroleum announced that it will acquire Andeavor for $23.3bn to form the largest oil refining company in the United States by capacity.
Shares of Andeavor surged 14.6% to $110.40 in midday trading, while Maratahon slumped 5.5% $76.92.
Attention this week turns to the Federal Reserve’s latest policy meeting. While the Fed is not expected to raise borrowing costs, its statement on Wednesday will be scanned for clues about future moves.
“There is some caution ahead of the decision on US interest rates and potentially make-or-break earnings from Apple” today, said London Capital Group’s Lawler.
Apple shares have slid in the past couple of weeks on concerns about slowing phone sales.
Lawler said extra volatility in the bond market has put more emphasis on economic data, with attention focused on the US jobs report and GDP data from the eurozone on Friday.
