FTSE:5,786.09 (+67.96) Mid-250:11,511.24 (+165.42) Small Cap:3,166.31 (+24.51)

UK STOCKS climbed for a third day yesterday as Japan made progress in cooling nuclear reactors that were damaged during the March 11th earthquake and tsunami.

Vodafone and BT rallied after ATT agreed to buy T-Mobile USA from Deutsche Telekom for about $39 billion in cash and stock to create America’s largest mobile-phone company.

The benchmark FTSE 100 Index gained 67.96, or 1.2 per cent, to 5,786.09 at the close of trading in London.

The FTSE All-Share Index also rose 1.2 per cent.

After three days of gains, the FTSE 100 is still 5 per cent lower than this year’s high on February 8th.

“We find the backdrop for stocks still constructive,” said Mislav Matejka, the London-based head of European equity strategy at JPMorgan.

“The tragic Japanese natural disaster should not hurt activity sustainably, and global real GDP growth will be above the trend in the first half of the year even with the recent move up in oil prices on the back of geopolitical unrest,” he said.

The US, UK and France began imposing a no-fly zone over Libya last weekend. Allied officials said air and missile strikes have effectively grounded Muammar Qadafy’s air force.

Vodafone climbed 3.6 per cent to 176p and BT gained 2.4 per cent to 181.4p.

Telecom companies led gains in European shares after the announcement of ATT’s acquisition, the largest in the wireless industry since 2004.

Weir advanced 4.5 per cent to 1,708p as Credit Suisse upgraded the Glasgow-based engineering company to “outperform” from “neutral”.

Punch Taverns rallied 6.7 per cent to 73.55p. The UK’s largest pub owner may be split into two with the Spirit division spun off to manage pubs, the Sunday Times said.

Regus surged 16 per cent to 116.6p as the world’s largest operator of serviced offices reported earnings before interest and tax that topped consensus estimates.

Essar Energy slid 7.3 per cent to 440.4p as the Indian oil refiner and power plant operator said it incurred delays in gaining approval for the development of some domestic coal blocks. – (Bloomberg/The Financial Times Limited 2011)