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Oil stocks, AstraZeneca support FTSE 100; Morrisons drops

London’s FTSE 100 index edged higher on Monday on support from heavyweight oil stocks and gains in AstraZeneca, while Morrisons dropped after private equity firm Clayton, Dubilier & Rice (CD&R) won a bid for the company.

Morrisons declined 3.7%, its worst single day fall since September last year, after US private equity firm CD&R won the auction for Britain’s fourth-largest supermarket with a 7 billion pound ($9.5 billion) bid, only marginally above its 285 pence a share offer, already recommended in August.

Peer Sainsbury’s rose 3.9% on hopes that SoftBank’s Fortress Investment could turn its attention to the company after losing out the bidding war for Morrisons.

The blue-chip FTSE 100 index inched 0.1% higher, with AstraZeneca providing the top boost, up 1%, after its breast cancer drug, Enhertu, received a breakthrough therapy designation.

Weakness in financials, including HSBC, Prudential and Lloyds Group, limited further gains for the index.

The oil sub-index rose 1.2% as heavyweights BP and Royal Dutch Shell rose 0.8% and 1.3%, respectively, following price target raises by Barclays.

The domestically focussed mid-cap index fell 0.5%, led by declines in consumer discretionary stocks.

The FTSE 100 is up nearly 8.5% so far this year on accommodative central bank policies and re-opening optimism.

The index is, however, 2.3% below the highest point hit this year as inflation risks and signs of slowing local and global economic growth have weighed on investor sentiment.

“Inflation continues to underpin market sentiment, with fears over a protracted period of above-target prices bringing expectations of a dramatic rerate in monetary policy expectations,” said Joshua Mahony, senior analyst at IG Group.

“Investors are growing increasingly fearful that the November and December period is characterised by a lack of supply and higher prices.”

Among other stocks, online trading platform Plus500 rose 2.3% after raising its forecast for the second time in less than three months.

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