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Gartmore recommends increased M&A

Gartmore is recommending more merger and acquisitional activity as a result of the FTSE 100 All-Share rising strongly since April.

It has been driven upwards by a number of positive influences such as corporate earnings that have been better than many investors expected.

With London oil prices rising to nearly 40 a barrel, Gartmore says the bears are starting to question where the next leg of the two-year bull market can come from.

Gartmore head of UK equities Jon Thornton says M&A activity is a potential key support to equities in the coming months.

He says: “One of the more obvious market themes at the moment is corporate activity and it is not a theme that we see going away any time soon.

“UK equities are attractively valued and with low PE multiples across the market this makes the majority of acquisitions earnings enhancing – often from year one.

“Effectively, the market is telling companies to buy each other and strip out costs rather than spend money on longer-term investment plans.”

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