FTSE 100 boosted by RSA takeover interest

(Close): Insurance group RSA's shares were up 18.43% as Zurich Insurance said it was considering a bid for the firm.

Following speculation it was mulling a bid, Zurich issued a statement saying it was "evaluating a potential offer".

RSA's rise helped to lift the FTSE 100 index 50.15 points to 6,555.28.

Shares in Hikma Pharmaceuticals rose 11.59% after it announced it was buying US generic drugs business Roxane from German drugmaker Boehringer Ingelheim for $2.65bn.

GKN also gave the FTSE a boost, rising 7.32% after it announced it was buying Dutch firm Fokker Technologies for €706m (£503m).

The UK engineering firm said the deal would strengthen "GKN Aerospace's market leadership, manufacturing footprint and technology".

Shares in UK broadcaster ITV rose 2.46% after the company reported a 25% increase in half-year pre-tax profits to £391m.

Royal Mail shares headed in the opposite direction after an unwelcome delivery from Ofcom.

The regulator said Royal Mail had broken competition law when it proposed raising prices for its bulk mail delivery customers. Shares in Royal Mail dropped 17.3p, or 3.43%, to 486.70p.

In the FTSE 250, shares in Melrose Industries jumped 9.63% after the company said it was selling its Elster utility consumption meter business to Honeywell International for £3,3bn.

Virgin Money shares surged 10.84% after the lender reported a 37% jump in half-year underlying pre-tax profits to £81.8m, helped by a big increase in mortgage lending.

The bank also said it did not expect a new surcharge on bank profits, announced earlier this month in the summer Budget, to affect growth.

On the currency markets, the pound rose after the latest GDP data showed the UK's economy accelerated in the second quarter of the year.

The economy grew by 0.7% in the quarter, adding to speculation that the Bank of England might rise interest rates in the months ahead.

The pound rose 0.33% against the dollar to $1.56110 and jumped 0.71% against the euro to €1.41260.