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April 8, 2015

FTSE 100 turns back in afternoon session

Despite the oil sector being galvanised by Shell's blockbuster takeover of BG Group, UK shares headed south in the afternoon session.

The FTSE 100 climbed above 7,000 today at one point but finished at 6,937, down 24.

Part of that fall can be attributed to the 8.6% loss on Royal Dutch Shell (LON:RDSB) shares - the most heavily weighted in the index - after the oil super-major announced an agreed takeover of BG (LON:BG).

The deal, worth £47bn, sent BG shares through the roof to 1,153p, more than 26% higher.

Other oil companies also jumped on hopes of a wave of consolidation will follow the squeeze of low crude prices.

Tullow Oil (LON:TLW) climbed 4.4% to 313.6p while Ophir Energy(LON:OPHR) jumped 7.4% to 156.3p. The two FTSE 250 stalwarts contributed to a 40 point rise by the mid-cap index to 17,561.

Takeover talk was plentiful elsewhere and shares in Sky (LON:SKY) rose 1.6% after speculation concerning a potential takeover bid by French media company Vivendi.

The owner of French pay TV group Canal+, is said to be looking to build a pan-European pay TV giant after reviewing smaller targets.

Sky has a market value of just over £17bn, but could cost Vivendi as much as £28bn including debt.

The deal would bring together Vivendi’s biggest shareholder Vincent Bolloré and Rupert Murdoch, whose 21st Century Fox has a 40% stake in Sky.

Talks between the companies were said to be at ‘an early stage’ by one report, but this has since been disputed by Vivendi representatives.

Among the small caps, oil companies were also in vogue, with SacOil (LON:SAC), up 44%, the biggest riser of the day after it reached a settlement with Energy Equity Resources Norway Limited (EERNL) over outstanding loan amounts related to two oilfield developments in Nigeria.

Hunter Resources was the next biggest riser as it improved terms on a joint venture agreement. Shares leapt 36% to 0.46p.

Irish oil and gas group Lansdowne Oil and Gas (LON:LOGP) jumped more than 22% to 5.5p after it said it consider sales and farm-outs of its assets.

Going the other way was oil exploration company Trinity (LON:TRIN), as it said it would also consider sales and farm-outs of its assets; nevertheless, the shares shed 11% at 17p.

Meanwhile, SeaEnergy (LON:SEA), which holds a stake in Lansdowne, hit the skids, shedding 13.5% at 20.75p after it wrote down the value of its stake, thus widening full-year losses from 2013's level, at least on paper. @MasterMetals MasterMetals Blog

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