FTSE gains ground ahead of Fed with miners up and Tui rising

Ahead of the US Federal Reserve meeting - which is widely expected to see the end of its monthly bond buying programme - leading shares are moving higher.

Tui Travel is among the main gainers, up 12.3p to 395p after its shareholders and investors in its majority shareholder Tui AG approved plans to merge the two businesses. Analyst Karl Burns at Panmure Gordon said:

In our view, this is a positive outcome, with the merger matching hotel capacity with airline capacity in order to secure future content in new and existing destinations and drive medium to long term growth. Whilst the combined Tui will likely be initially more capital intensive, higher returns are likely through increased vertical integration and revenue and cost synergies (of up to €215m or 24% of pro-forma group EBITA). Furthermore, on a pro-forma basis the combined group is likely to hold a net cash position of around€500m (or 7% of the combined market capitalisation) and by 2017, post conversion of convertibles and potential disposal of non-core assets, we estimate around €3bn could be returned to shareholders (or 44% of the combined market capitalisation). Therefore, we believe the merger will add significant value to shareholders and we reiterate our buy recommendation on Tui Travel and 503p price target.

Mining shares were also in focus, as metal prices including copper and gold gained ground. Randgold Resources has risen 85p to £40.62 while Anglo American has added 15p to 1359.5p, helped by Morgan Stanley raising its target price from £14.40 to £15, albeit with an underweight rating. Antofagasta is up 6p to 706.5p despite a 5% fall in third quarter output, mainly due to halting production at its Los Pelambras mine after a fatal accident. The company said it was on track to reach its target of 700,000 tonnes of copper this year. Peel Hunt said:

We maintain our buy recommendation and target price of 928p. We anticipate a stabilisation of operating costs from 2015 onwards, and increases in production as a result of the Antucoya project coming on line. Antofagasta remains one of the safest ways for investors to gain exposure to the copper market.

But a profit warning from Next - the almost unheard of event being blamed on unseasonably warm weather - has sent the retailer’s shares tumbling 135p or 2% to £63. Rival Marks & Spencer is down 6.2p to 400.4p.

Standard Life has slipped 4.4p to 380.9p after the insurer group reported strong inflows in the third quarter, but warned that changes in pension rules hit sales of key products and made the outlook uncertain. Oriel Securities issued a buy note but said:

The third quarter statement shows growth in assets under management and fee based revenue, and the company is poised to return £1.75bn to shareholders in 2015, although UK net inflows seem weak and as an asset manager, market volatility is likely to affect fee levels in the short term.

But overall, with investors focused on the Fed, the FTSE 100 is up 30.01 points at 6432.18, following overnight gains on Wall Street and in Asia.