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FTSE 100 close to setting new record high

Resurgent mining stocks and a fresh bout of merger and acquisition activity lifted the FTSE 100 Index to near its highest point of the year.

London's top flight index was 37.2 points higher at 6851.7 and within a whisker of following Wall Street's Dow Jones Industrial Average in setting a new record.

There was also further improvement for the pound, which continued to rally on expectations that interest rates will start to rise early next year. Sterling was slightly stronger against the US dollar and euro at 1.68 and 1.22 respectively.

Miners dominated the FTSE 100 risers board after broker JP Morgan upgraded its recommendation on the sector after being "underweight" on the industry for more than two years. With the city encouraged by signs of a rebound in activity in China, Rio Tinto surged 5 percent to 3340p, Antofagasta lifted 27p to 796p and BHP Billiton cheered 51.5p to 1948p.

BSkyB's confirmation of a possible £8 billion swoop for 21st Century Fox's Sky Italia and Sky Deutschland stakes provided the wider market with further evidence that merger and acquisition activity is on the way back.

The purchase should give BSkyB the power to sell services three key European territories, but the potential cost weighed on its share price, with the blue-chip at the top of the FTSE 100 fallers board.

BSkyB was 21.5p lower at 868.5p as Investec Secutirites warned that Sky Italia and Sky Deutschland were weaker businesses than BSkyB and so initially might dilute the UK firm's share price in the short-term but would bring welcome scale over the long term.

BT shares were impacted by the potential threat of increased competition from its pay-TV rival. BT fell 8.2p to 374.3p, while ITV was 2.2p lower at 186.8p in a tough session for the media sector. Barclays was 3.5p lower at 256.65p after a number of broker downgrades in the wake of last week's strategy review. Shares in outsourcing firm Capita made headway after it reported a strong start to the year, with £1.1billion of new sales lifted 15p to 1117p.

Outside the top flight, Superdry owner Supergroup continued its slide from last week after it warned its full-year profits will be at the low end of expectations.

The FTSE 250 company has shaken investors due to fears the downgrade may reflect stock management issues, which has blighted the company before.

The stock was the biggest faller in the FTSE 250 Index, slipping 5 percent or 60p to 1065p and meaning it has lost around 40 percent of its value since the start of April.

The biggest FTSE 100 risers were Rio Tinto up 151.5p at 3340p, Antofagasta ahead 27p at 796p, Petrofac up 41p at 1218p and BHP Billiton ahead 41p at 1218p.

The biggest fallers were BSkyB down 21.5p at 868.5p, BT off 8.2p at 374.3p, Barclays down 3.5p at 256.65p and Sports Direct off 9p at 759.5p.

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