Building materials group Hanson was chased to an all-time high as investors relished the prospect of further consolidation in the sector.
News that Vulcan Materials has agreed to buy smaller US aggregates player Florida Rock in a $4.6bn ( pounds 2.4bn) deal spurred the blue-chip company up 23½ to 835p on heavy volumes. Hanson has in the past been rumoured to be a target for Mexican cement company Cemex.
As ABN Amro put it: "We think this is excellent for Hanson. It shows that aggregates players are looking beyond any short-term weakness in US housing and focusing on the long-term scarcity value of reserves.
"The deal multiple would imply a takeover value for Hanson (assuming the same multiple) of pounds 12.40. We reiterate our buy rating and target price of pounds 10.60.’’
Wolseley, the heating and plumbing giant which has recently been viewed as a target for a private equity company, ticked up 3p to pounds 13.72.
Despite Hanson’s rise, the FTSE 100 fell 32.1 to 6412.3 and the FTSE 250 drifted 49.2 lower to 11586 on profit taking.
Power generator Drax Group was 24½ stronger at 686½p after Goldman Sachs moved its rating on the stock from neutral to buy. "The potential upside in the shares is now material. We expect more normal weather conditions and higher prices elsewhere in the world to drag up UK gas prices, in turn pushing up UK power prices and Drax’s outlook.’’