U.K. stocks gained Tuesday, with RSA Insurance Group Inc. rallying on word of a possible takeover bid, but Royal Mail PLC shares falling after a regulator's rebuke. Meanwhile, the pound gained ground after growth in U.K. gross domestic product met expectations. The benchmark FTSE 100 UKX, +0.83% rose 0.7% to 6,548.62, on track for its first advance in six sessions. The index on Tuesday was knocked back 1.1% in a global rout of equities sparked by a plunge for Chinese shares. A flurry of M&A developments supported British blue-chips on Tuesday. RSA RSA, +15.01% surged 13% after Zurich Insurance Group AG ZURN, -0.91% said it's "evaluating a possible offer" for the British firm. The Swiss insurer said it can't, however, make assurances that an offer will be presented. Meanwhile, Hikma Pharmaceuticals PLC HIK, +7.60% climbed 7% after the company said it's buying Roxane Laboratories Inc. and Boehringer Ingelheim Roxane Inc. for up to $2.65 billion in cash and shares. The deal is expected to push Hikma's position in the U.S. generic drugs market. In other deal news, GKN PLC GKN, +6.98% shares popped up 6.4% after the engineering company said it will buy Fokker Technologies Group BV for an enterprise value of 706 million euros ($779.98 million) from private equity owner Arle Capital. "Aerospace has been our top priority for acquisitions," said GKN Chief Executive Nigel Stein in a statement. But at the bottom of the FTSE 100 was Royal Mail RMG, -2.92% Shares fell 3.3% after a regulator, the U.K. Office of Communications or Ofcom, said the company's changes to wholesale prices for bulk mail-delivery services, or access services, breached competition law by discriminating against rival operators. BP PLC BP., +2.23% shares, meanwhile, turned higher by 1.2%. The oil major swung to a second-quarter loss, hurt by lower oil prices and a multibillion-dollar charge relating to the recent deal to settle claims in the U.S. over the 2010 Deepwater Horizon disaster. Sterling: The currency GBPUSD, +0.0000% rose to $1.5585 after preliminary U.K. government data showed the economy grew 0.7% in the second quarter, and by an annualized rate of 2.8%. Sterling was buying $1.5559 late Monday in New York. "This goes some way to supporting the hawkish stance taken by Bank of England officials last week when referring to the potential for an interest rate hike by the turn of the year," said Alex Edwards, currency analyst at UKForex, in a note. But the central bank still needs to consider that the U.K. inflation rate "remains close to rock bottom, problems persist throughout the eurozone, and it's still unclear whether the [Federal Reserve] will increase U.S. interest rates before the end of the year," in the wake of turmoil in Chinese stocks, said Edwards. The Fed will begin its two-day monetary policy meeting later Tuesday. Source: MarketWatch
