Around £43.5bn added to the value of Britain’s top companies as markets welcome economic data and hope for Greek solution

Leading shares moved higher for the fourth day in a row yesterday, reaching their best level for more than six months, thanks to forecast-beating US jobs figures and continuing hopes of a resolution to the Greek debt crisis.

The FTSE 100 closed up 105 points at 5901.07, with insurer Admiral topping the risers. The group, which has been under pressure since a profit warning last November, jumped 76p to £10.38 after news it had extended its existing UK car reinsurance partnerships until 2014 at the same cost, as well as positive comments from Munich Re, one of its key partners. Ben Cohen at Collins Stewart said:

Munich Re expects €350m premium growth in 2012 due to ‘strong price increases in recovering markets (eg proportional UK motor)’. Munich’s biggest relationship in motor by some margin is with Admiral (40% co-insurance in the UK, 65% reinsurance outside the UK (ex-France)).

We think there is meaningful read-across to our Admiral forecasts. Since the third quarter update, we had been assuming flat premiums in the UK in 2012. Working backwards from Munich’s €350m, we assume €250m of the growth will come from Admiral, which we split three-quarters UK, one-quarter international. This leads us to a 6% increase in UK profits in 2012 and 10% in 2013 (because commissions earn through over time), slightly offset by a higher loss in international, for a 4% earnings per share increase in 2012 and 9% for 2013.

We raise our price target from 880p to 975p.

Since Monday the FTSE 100 has added 168 points – nearly 3% which has added £43.5bn to the value of Britain’s top companies over the week. Investors’ spirits were lifted by positive manufacturing data from around the globe on Wednesday and the surprisingly good US non-farm payroll numbers yesterday, which showed 243,000 jobs created in January compared to expectations of a 150,000 rise. Joshua Raymond, chief market strategist at City Index said:

The FTSE 100 has now firmly broken past resistance at the 5800 level to close the week higher by over 2% and at its week’s trading highs. This is a positive sign for the FTSE and if the Bank of England can deliver next week with announcing more quantitative easing, there is every chance that the FTSE 100 can recover the 6000 level sooner rather than later.

On the corporate front, a proposed £50bn merger between Glencore, up 20.85p at 482.55p yesterday, and Xstrata, 52.5p higher at £12.83, ignited the mining sector. Anglo American – a possible target for the merged group – added 79.5p to £29.10.

There was a mixed picture from the week’s trading updates, with disappointing figures from Unilever, up 35p to £20.29 yesterday, Royal Dutch Shell, down 4p at £22.61 and AstraZeneca, up 26p at £30.10.

Elsewhere Tullow Oil added 22p to £14.62 yesterday after the exploration company signed two new production licences with Uganda and said it was going ahead with a deal to partner with Total and China’s CNOOC in the fields involved at the Lake Albert Rift Basin. Tullow expects the transfer of funds to take place as soon as possible. Tullow has also been awarded a production licence for the Kingfisher project.

British Gas owner Centrica was on the rise after analysts suggested it could return up to £1.2bn to shareholders.

The company raised its stake in the Statfjord field in the north sea earlier in the week, but UBS said further such deals were unlikely to fit its acquisition criteria. Analyst Stephen Hunt said:

Even though Centrica’s preferred strategy remains vertical integration, if the company doesn’t find sufficient investment opportunities, then it could redistribute cash.

We believe that the payment of a special dividend of up to 23.5p a share (8% yield, totalling £1.2bn) is possible in 2012, although Centrica would likely target a lower payout in order to leave headroom for further acquisitions. Strong cashflows mean such a payment could also be repeated in future years.

Hunt repeated his buy recommendation and 330p price target, helping push the shares 5.3p higher to 300.9.

Takeover speculation returned during the week to waste management group Shanks, down 2.5p at 110.5p on profit taking yesterday, and recruitment company Hays, up 5.8p at 85.75p.

Old Mutual added 6.3p to 157.8p after it said it would return £1bn to shareholders via a special dividend after the sale of its Nordic businesses to Skandia.

Lower down the market Enterprise Inns rose 2.75p to 42p following the sale of 15 tenanted pubs to Fuller, Smith & Turner, up 17.5p at 740p, for £22.9m, compared to their £18.4m book value.

Game Group jumped 25% to 6.64p as the troubled retailer agreeing revised lending terms with its banks.

Dixons Retail rose 0.69p to 14.39p after John Lewis reported strong demand for electrical goods last week – up 19.2% helped by continuing demand for tablets and notebooks. Freddie George at Seymour Pierce said:

The news on electricals should help to support the Dixons Retail share price and shows that the positive trend seen in electrical sales in the first couple of weeks of January has continued throughout the rest of the month.

Finally, drug discovery firm Summit Corporation closed 37% higher at 6.5p. A new scientific paper on the progress in understanding and treating Alzheimers drew investors’ attention to Summit’s work in this area, where it is developing possible treatments for the disease.

Exploration group signs licensing deal with Ugandan government, while leading shares await US employment data

As the FTSE 100 heads for another new six month peak, Tullow Oil has gushed more than 3% higher.

The exploration company has signed two new production licences with Uganda and is going ahead with a deal to partner with Total and China’s CNOOC in the fields involved at the Lake Albert Rift Basin. Tullow expects the transfer of funds to take place as soon as possible. Tullow has also been awarded a production licence for the Kingfisher project.

The news has lifted Tullow 51p to £14.91 and helped the leading index climb 8.36 points to 5804.43 ahead of the US non-farm payroll figures this afternoon. A rise of between 135,000 and 150,000 is expected. Manoj Ladwa at ETX Capital said:

Equities have begun the trading session quietly but with a mildly positive feel about them as the FTSE 100 shows no signs of selling off. Trading is likely to be quiet ahead of non-farm payroll numbers out later in the session. Anything greater than the market expects is likely to see equities closing on the highs for the week.

BT has climbed 6.3p to 212.2p after its results, while Man has recovered another 6.1p to 212p with traders saying the hedge fund group’s shares had been oversold recently on worries about its growth prospects.

Insurer Admiral is topping the risers, up 87p to £10.49 after news it has extended its existing UK car reinsurance partnerships until 2014 at the same cost, as well as positive comments from Munich Re. Ben Cohen at Collins Stewart said:

Munich Re expects €350m premium growth in 2012 due to ‘strong price increases in recovering markets (eg proportional UK motor)’. Munich’s biggest relationship in motor by some margin is with Admiral (40% co-insurance in the UK, 65% reinsurance outside the UK (ex-France)).

We think there is meaningful read-across to our Admiral forecasts. Since the third quarter update, we had been assuming flat premiums in the UK in 2012. Working backwards from Munich’s €350m, we assume €250m of the growth will come from Admiral, which we split three-quarters UK, one-quarter international. This leads us to a 6% increase in UK profits in 2012 and 10% in 2013 (because commissions earn through over time), slightly offset by a higher loss in international, for a 4% earnings per share ncrease in 2012 and 9% for 2013.

We raise our price target from 880p to 975p.

Game Group is one of the day’s stars, up 35% to 7.2p after the troubled retailer agreeing revised lending terms with its banks.

Dixons Retail is up 0.28p at 13.98p after John Lewis reported strong demand for electrical goods last week – up 19.2% helped by continuing demand for tablets and notebooks. Freddie George at Seymour Pierce said:

The news on electricals should help to support the Dixons Retail share price and shows that the positive trend seen in electrical sales in the first couple of weeks of January has continued throughout the rest of the month.

The strong January jobs report may finally put a nail in the QE3 coffin.

Company in preliminary discussions about all-share merger, but City says rival bid could be flushed out

IT group Misys has been in the spotlight again in recent days as a possible takeover target, with traders suggesting a new move from US group Fidelity National Information Systems (FIS) which has already walked away once.

But an announcement that the company is in fact in merger talks with Swiss rival Temenos has caught speculators on the hop. Misys said it was in preliminary talks with the Swiss about an all share merger, although there was no guarantee a deal would be completed.

Disappointment that it was not a bid complete with a premium has sent Misys shares 2.5p lower to 323p, even though some are hoping the news will indeed flush out another predator. George O’Connor at Panmure Gordon said:

It was probably someone in corporate finance who cooked this one up – Temenos wants to expand in the US (Misys has a slim 18% of revenue there) and Misys wants to do ‘something’ (Temenos is something). Operationally the phrase ‘buggers muddle’ springs to mind in terms of the difficulties in banging these two businesses together – however this likely translates in capital markets speak to ‘cost synergies and ‘products dovetailing into each other’.

Bulls will suggest that FIS will use this to counter-bid Misys at 450p or so – more likely FIS is watching squeamishly from the isles. To reflect bid premium we ratchet up our target price to 385p from 334p and move from hold to buy – we are not going to stand in the way of the party – however the risk is that the vague counter-bid rumours (FIS again) push the price higher; consequently, we would therefore take profits north of 400p.

Julian Yates at Investec was also unconvinced and wondered about the timing of the deal:

In the past this deal would have made sense. Misys did not have a credible next generation core banking product, but had a large installed base. Temenos had a leading product, but not the deep customer base.

However at last Misys has the new competitive bank fusion offering and early take-up signs are very positive. On this basis the benefits of merging with Temenos are not as clear cut as they were previously and as such it seems strange timing for Misys to ‘need’ to merge. However there will likely be potentially material cost savings and current trading may be pressuring both companies to talk.

Due to the very early stages of these announcements, it seems to us that there is a prospect that another bidder may come into the fray. A cash offer would surely be more attractive to shareholders.

Analysts at UBS say company could consider special dividend if it fails to find suitable acquisitions

British Gas owner Centrica is on the rise after analysts suggested it could return up to £1.2bn to shareholders.

The company raised its stake in the Statfjord field in the north sea earlier in the week, but UBS said further such deals were unlikely to fit its acquisition criteria. Analyst Stephen Hunt said:

Even though Centrica’s preferred strategy remains vertical integration, if the company doesn’t find sufficient investment opportunities, then it could redistribute cash.

We believe that the payment of a special dividend of up to 23.5p a share (8% yield, totalling £1.2bn) is possible in 2012, although Centrica would likely target a lower payout in order to leave headroom for further acquisitions. Strong cashflows mean such a payment could also be repeated in future years.

Hunt repeated his buy recommendation and 330p price target, helping push the shares 4.1p higher to 299.7p.

Company says US group One Media Technology is considering an offer

Some excitement in the small cap sphere with shares in Worldlink more than doubling on news of a possible takeover.

The company, which specialises in mobile data and only joined the stock market at the end of November last year, said US group One Media Technology had made an approach about an offer. It has until 2 March to make a firm decision.

The news sent Worldlink’s shares soaring 29.5p to 53.5p

Just over a month ago Worldlink issued a statement saying it knew of no reason for a rise in its share price at that time, beyond a note being issued on the company by its broker Bridge Hall.

Last week Worldlink announced it was changing its adviser and had appointed XCAP Securities as its broker.

Worldlink’s technology allows information held on a mobile device to be updated automatically without the need for a manual refresh, and it holds patents in the UK and US.

One Media is a supplier of tablets and software products based in Chicago

U.S. stocks rallied Friday, as investors cheered a much stronger-than-expected jobs report.