THE FTSE 100 rose on Tuesday, supported by Shire's shares as the company received a revised takeover proposal from Takeda.
London's blue-chip index closed the day up 0.36% or 26.53 points at 7,425.4 points.
Shire was the biggest riser on the FTSE 100 after Japan's Takeda tabled another offer for the pharmaceutical giant ahead of a deadline to reach a takeover deal.
The company said on Tuesday it received a fifth proposal from Takeda after the firm put forward a £44 billion offer last week. Shire's shares closed the day 3.42% higher at 3,930p.
Jasper Lawler, head of research at London Capital Group, said: "It could be third time lucky for Takeda. Shire looks tempted as it publicly considers the offer.
"We tend to think management has already shown its hand by selling the oncology unit, and the result will be another 'thanks but no thanks'."
Shell and BP rose by 1.24% or 32p and 2.30% or 12p respectively as oil prices rose above $75 per barrel during the day's trading.
However, towards the end of the session, Brent crude was down 0.36% to $74.74 per barrel.
The pound made gains on Tuesday, rising by 0.34% against the dollar to 1.398.
Against the euro, sterling was up 0.15% to 1.143.
In UK stocks, bookies were hit following reports suggesting the Government will cut the maximum stake for fixed odds betting terminals (FOBTs) to £2.
The recommendations of a review carried out by the gambling regulator earlier this year said the maximum stake should be set at or below £30.
But reports suggest Chancellor Philip Hammond has opted to accept advice from campaigners for a more drastic reduction to £2.
Shares in William Hill tumbled 12.7% or 42.7p, PaddyPower was down 4.85% or 355p and Ladbrokes owner GVC shed 6.02% or 58.5p by the close of play.
Anglo American said it is set to take a profit hit of up to $400 million (£287m) after the mining giant was forced to suspend production at its iron ore mine in Brazil because of a cracked pipe.
The group first halted production at the Minas-Rio mine in March after finding a leak in the pipeline that carries iron ore slurry to the port.
On Tuesday, Anglo said it will take 90 days to allow it to undertake a full inspection, including an internal scan of every section of the pipeline. Shares fell 28p to 1,747.6p.
British broadband firm CityFibre has agreed to a £537.8m takeover by a consortium of investors backed by US banking giant Goldman Sachs.
Shares in CityFibre, which floated on the stock market in 2014, jumped 90% higher after the deal was unveiled. The share price closed up 36.8p to 78.8p.
Business Secretary Greg Clark waved through the sale of one of Britain's oldest engineering firms to a controversial investment group.
Mr Clark dismissed claims of a "predatory" takeover as he confirmed the sale of GKN to Melrose Industries in the House of Commons. GKN's shares were down 8.5p to 451.4p.
The biggest risers on the FTSE 100 were Shire up 130p to 3,930, Royal Mail up 16.2p to 581.8p, BP up 12p to 533.6p and Antofagasta up 21.4p to 977.4p.
The biggest fallers on the FTSE 100 were Paddy Power down 355p to 6,965p, Kingfisher down 6.4p to 303p, St James's Place down 23.5p to 1,123p and Mediclinic International down 13p to 673.4p.
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