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Hopes of further QE lift FTSE 100 while Smith & Nephew climbs again on bid talk

Hopes that despite disagreements the US Federal Reserve will have to act to stimulate the country’s sluggish economy, along with calls for further quantitative easing elsewhere, have combined to push leading shares higher once more.

The FTSE 100 is 46.38 points higher at 5315.04, its highest level since the middle of the month. Miners are again wanted on demand hopes, with Vedanta Resources up 35p at £13.72.

But Smith and Nephew is leading the way, up another 32p at 628.5p following Tuesday’s talk of a possible 850p a share bid from US rival Stryker. But Justin Smith of MF Global was not convinced:

We believe an acquisition of Smith & Nephew by Stryker or Johnson & Johnson would not be cleared by the US anti-trust authorities because the combined market shares of the hip and knee implant businesses would be anti-competitive. In our view the extent of the divestments which would be required for the deal to be cleared by anti-trust would also compromise the strategic rationale of an acquisition because the synergies would be so limited.

Tesco has added 7.1p to 371.9p on news of its plan to quit Japan after eight years. It has put its loss making business in the country, which comprises 129 small format stores, up for sale. Kate Calvert at Seymour Pierce said:

While immaterial in Group terms, the strategic decision by [new chief executive] Phil Clark to finally dispose of its Japanese business will be welcomed by the market for Tesco has never made an acceptable return from the business it acquired in 2004. It follows Carrefour, which swapped its Japanese assets for Tesco’s Taiwanese asset in 2005, out of the country. Japan will remain a notoriously difficult country to make money out of, as Wal-Mart is also finding, having had a presence in Japan since 2002 through Seiyu (now a wholly owned subsidiary).

We have a buy recommendation as we believe Tesco is well positioned to benefit from the pick up in the global economy, though the UK business is likely to continues to hold back sentiment until there is clearer evidence that the business is back performing at least in-line with its peers. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds