International Power and miners drag FTSE out of bank and BP shadows

International Power’s (LON:IPR) reported reopening of negotiations with French firm GDF Suez over a multi-billion pound merger between the two electricity generators has pushed the group's share price over 10 per cent higher this morning. Stronger metal prices have also bumped the mining sector higher with mining stocks joining with International Power to improve investor sentiment despite new-found global economy concerns pulling bank stocks down and BP (LON:BP) shares struggling with new reports that the latest Gulf of Mexico well cap is failing to contain the leaking oil.

International Power is currently discussing a deal with GDF that would see the French group become a majority shareholder in the British-based firm that currently has businesses in over twenty countries. The merger would mean that the two companies would merge their international operations outside of Europe as well as resources in the UK and Turkey.

The potential deal has pushed the share price in International Power to a new year high of 352.60p – over 36p up, the equivalent of an 11.3 per cent gain – and has helped the FTSE 100 make positive progress despite poor activity on the market in banking and BP stocks.

Banks were hit by another wave of global economy concerns at the start of this new week. In the previous five sessions the sector was hammered by poor US macro-economic data and a flurry of disappointing interim reports from US firms. And the sector felt no respite today after credit ratings agency Moody downgraded Ireland’s sovereign bond rating and talks between Hungary and the International Monetary Fund (IMF) were suspended.

Royal Bank of Scotland (LON:RBS), Barclays (LON:BARC) and Lloyds Banking Group (LON:LLOY) felt the brunt of the news early in the session posting losses in the region of 1.6 and 2.7 per cent. However, Lloyds and Barclays have rebounded to make gains by 10:20BST and RBS sits just shy of the opening price for the session.

One group that does look set to post losses on the market today is BP. The oil giant capped the leaking oil well in the Gulf of Mexico last week and reported some success with the operation. But that success seems to be behind them as the group said a test on the cap had found methane was leaking from the well which may also mean oil was seeping out, too. If this is the case, the under-fire oil firm will have to remove the cap and continue the pain-staking process of filtering the oil to the surface until the relief well is finished next month.

The share price is currently down 2.1 per cent, losing 8.5p to drop back below the 400p marker at 398.60.

One sector that is seeing a positive turn-around in fortunes however is miners. Stocks suffered last week with weak metal prices and Asia import fears. But metal prices had firmed-up today putting Rio Tinto (LON:RIO), Xstrata (LON:XTA) and Vedanta Resources (LON:VED) two per cent up.

The FTSE 100 is 0.4 per cent up at 10:30BST at 5,179.31 with a gain of 20 points.

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