FTSE tracks US markets up; M&A, commodities buoy

By Michael Taylor

LONDON, Jan 31 (Reuters) - The FTSE 100 .FTSE of Britain's leading reversed early losses to end higher on Thursday, supported by U.S. markets, M&A activity and commodity stocks.

The blue-chip index ended up 42.5 points, or 0.7 percent at 5,879.8.

The FTSE 100 is down almost 9 percent for the month -- the worst-performing January since 2003 -- as persistent recession concerns triggered global stock market ructions.

Miners lent support as metal prices gained ground with Anglo American (AAL.L: Quote, Profile, Research) rising 3.2 percent.

Rio Tinto (RIO.L: Quote, Profile, Research) gained 2.8 percent on bets that its rival BHP Billiton Ltd (BLT.L: Quote, Profile, Research), up 2.1 percent, was poised to launch a sweeter offer than it proposed last November. See [ID:nSYD139802]

Also on the M&A front, retailer Carphone Warehouse (CPW.L: Quote, Profile, Research) was up 8.1 percent as traders cited talk of possible bid interest from U.S. Best Buy BBY.L. Carphone declined comment.

On the economic diary, the Bank of England is expected to cut interest rates next week to head off fears of slowing growth and end the year with rates at 4.75 percent, a Reuters poll showed last week.

"There are a whole load of (market) rumours flying about," said Lawrence Peterman, investment director at Eden Financial. "It's tricky out there. I'm hoping that we do get some confirmation on some of these (possible) deals... it would be quite good for the market," he added.