* FTSE 100 up 0.5 percent; third straight day of gains
* Retailers up on sentiment and Travis Perkins bid
* BP top faller; spill costs hit $930 million
By David Brett
LONDON, May 28 (Reuters) - Britain's top shares rose on
Friday, with retailers lifted by M&A activity, though oil major
BP <BP.L> limited the index's gains as the costs of its oil leak
in the Gulf of Mexico neared $1 billion.
By 1051 GMT, the FTSE 100 <> was up 26.52 points or 0.5
percent at 5,221.69, up for a third day, after it closed up 3.1
percent on Thursday, hitting a one-week high, as concerns over
the euro zone debt crisis ebbed.
"We have started to see consistent stock demand and a return
in appetite for risk which has helped to pick the FTSE 100 up,"
Joshua Raymond, market strategist at City Index said.
Morgan Stanley on Friday raised its year-end 2010 target for
the FTSE 100 to 5,800 from 5,000 in a UK strategy review.
Retailers were among the best performers on the index after
mid-cap home improvements retailer Travis Perkins <TPK.L> made
an indicative 553 million pounds offer for mid-cap plumbing and
heating company BSS Group <BTSM.L>, sparking hopes of more M&A
activity in the sector.
Travis Perkins rose 8.9 percent, while BSS soared 35
percent.
Home Retail <HOME.L>, owner of Homebase and Argos, and
Kingfisher <KGF.L>, Europe's No.1 home improvements retailer,
gained 2 and 2.2 percent, respectively.
Other builders merchants were boosted by the consolidation
moves in the sector, with blue chip Wolseley <WOS.L> up 1.6
percent.
Retailers more generally were helped by bellwether
department store John Lewis, which said sales were up an annual
12 percent in the week to May 22. []
High street retailer Marks & Spencer Group <MKS.L> climbed
2.2 percent as UBS lifted its rating on the retailer to "buy"
from "neutral".
Bullish broker comment helped Thomas Cook Group <TCG.L> and
TUI Travel <TT.L> up 2 and 2.9 percent, respectively, as Nomura
upgraded its rating for both groups to "buy" from "neutral" in a
review of the UK leisure sector.
Unilever <ULVR.L> added 2.2 percent, with UBS raising its
rating for the consumer goods giant to "buy" from "neutral" on
valuation grounds.
Severn Trent <SVT.L> rose 2.9 percent after the water firm
reported a 24 percent rise in underlying pretax profit.
[]
BP "TOP KILL" FEARS
BP <BP.L> shed some of the previous session's gains, down
3.3 percent as it put the cost of tackling the biggest oil spill
in United States history at $930 million so far. []
The oil major still does not know whether its "top kill"
operation designed to plug the leak will be successful.
Royal Dutch Shell <RDSa.L> rose 0.5 percent. The company
said it would pay $4.7 billion in cash to buy privately held
East Resources Inc, giving it substantially more exposure to
crucial shale gas plays in North America. []
Peer BG Group <BG.L> rose 1 percent, helped by a price
target hike from UBS.
Prudential <PRU.L> shed 0.9 percent as Britain's largest
insurer said it was trying to negotiate a cut in the $35.5
billion it has agreed to pay for AIG's <AIG.N> Asian unit, AIA,
amid fears its shareholders might block the deal as too
expensive.
Data from across the U.S., including April personal income
and consumption data and May New York ISM numbers, May Chicago
PMI, and the final reading for May's University of Michigan
consumer sentiment survey, should give further clues as to the
state of the World's biggest economy.
(Editing by Will Waterman)
