By Polya Lesova, MarketWatch
LONDON (MarketWatch) -- London's benchmark stock index rose on
Monday, buoyed by gains for Royal Bank of Scotland Group, while
British Airways fell as severe winter weather disrupted numerous
flights in Europe.
The FTSE 100 index advanced 0.6% to 5,909.20 in early afternoon
trading. The index gained 1% last week.
One of the top gainers in the benchmark was Royal Bank of
Scotland (RBS) , shares of which rose 2.3%.
The Wall Street Journal reported that RBS is in discussions with
U.K. Financial Investments Ltd. to permit the bank to pay cash
bonuses to staff this year.
Utilities also gained, with shares of Severn Trent PLC gaining
1.4% and National Grid PLC moving up 1.7%.
In the beverage sector, shares of Diageo PLC gained 1.8% after
UniCredit Bank upgraded the stock to buy from hold. The broker also
raised its recommendation on Diageo rival Pernod Ricard to hold
from sell.
"Our preference between the two stocks is to be buyers of Diageo
where we believe the valuation is more attractive and the risks to
growth significantly lower," UniCredit wrote in a note to
clients.
Weather disrupts flights
Frigid weather in Britain and Europe disrupted hundreds of
flights over the weekend. Shares of British Airways PLC slipped
1%.
In a statement on Monday, the airline said that "severe weather
continues to cause significant disruption to our operation."
Heathrow Airport, one of the busiest in the world, currently has
only one of its two runways operational, and many parts of the
airfield remain unusable, BA said.
Shares of low-cost airline easyJet PLC also gave ground, down
1.2%.
Retailers also posted losses on concerns that the weather may
have prevented people from shopping during what was supposed to be
a very busy weekend. Next PLC dropped 1.3% and Marks & Spencer
Group PLC fell 1.1%.
Outside the top index, shares of online gaming firm 888 Holdings
PLC rallied 18% after Ladbrokes PLC said it's in very preliminary
discussions with 888 about a possible deal.
In a statement, 888 Holdings said "there can be no certainty
that these discussions will result in a formal offer being made for
the company."
Meanwhile, shares of fund manager Gartmore Group Ltd. tumbled
more than 10% after saying late Friday it's in talks with Henderson
Group PLC about a conditional offer by Henderson to acquire the
entire share capital of the company.
"These negotiations are on the basis of a proposal at a slight
discount to the Gartmore share price at the close of trading" on
Dec. 16, Gartmore said.
Henderson confirmed the talks on Monday but said that no terms
have been agreed on yet. Shares of Henderson rose 2.8% in
London.
Shares of Songbird Estates PLC rallied 3.1% after it said that
J.P. Morgan Chase & Co. (JPM) has acquired 25 Bank Street in
Canary Wharf for 495 million pounds (around $770 million) from
Canary Wharf Group PLC, the main operating subsidiary of
Songbird.
The building will become the new European headquarters of J.P.
Morgan's investment bank in 2012.
