FTSE 100 records best weekly performance in one month

By Atul Prakash and Sudip Kar-Gupta

LONDON (Reuters) - Britain's top equity index edged higher on Friday and recorded its best weekly gain since early October, with Imperial Tobacco (IMT.L) gaining on the back of a bid rumour and Royal Mail (RMG.L) rising for a second day after results.

The blue-chip FTSE 100 index (.FTSE) ended 0.1 percent higher at 6,334.63 points. It gained 3.5 percent this week, the best weekly performance in more than a month. The index closed 0.8 percent higher in the previous session after rising to its highest level in more than one week.

Royal Mail gained 2.5 percent, building on a 5 percent rise in the previous session after the postal company projected an increased level of cost cuts and said it had delivered a resilient performance in the six months ended Sept. 27 in a competitive trading environment.

Imperial Tobacco rose 1.7 percent after setting a record peak earlier in the session, with trading volumes reaching 300 percent of its 90-day daily average.

"Imperial Tobacco ... has registered fresh all-time highs on speculation that rival British American Tobacco (BATS.L) has been courting bankers about financing for a full takeover," Mike van Dulken, Head of Research at Accendo Markets, said.

"Nonetheless, gains are relatively modest for the supposed prey and well back from their highs of the day, given that talk of a deal has become rather perennial with suggestions from prior years being aired with increasing regularity in 2015."

Officials at Imperial Tobacco could not be reached for comment.

Airline stocks, however, came under some pressure, with traders citing an Islamist militant attack on a luxury hotel in Mali on Friday, as well as broker downgrades.

At least 27 people were reported dead after Malian commandos stormed the hotel in the capital Bamako with at least 170 people inside, many of them foreigners, who had been seized by Islamist gunmen.

"It’s the security threat for the whole travel & leisure sector," a trader said.

Shares in easyJet (EZJ.L) and Ryanair (RYA.L) fell 1.7 percent and 0.5 percent respectively, while British Airways owner IAG (ICAG.L) was down nearly 1 percent.

EasyJet shares also felt some selling pressure after Kepler Cheuvreux cut its rating on the airline to "reduce" from "hold" and Barclays reduced its target price for the stock.

Security company G4S (GFS.L) fell 3 percent as JP Morgan cut its price target on the stock.

The FTSE 100 is down around 4 percent since the start of 2015 and about 10 percent below a record high of 7,122.74 points reached in April.

The benchmark index has fallen back in the second half of this year, along with other global markets, on concerns about a slowdown in China and uncertainty over the timing of a possible U.S. interest rate hike.

(Editing by Mark Heinrich)