BG Group shares surge on Shell takeover deal

(Close): Shares in BG Group soared 26.65% after it backed a £47bn takeover by oil giant Royal Dutch Shell.

BG shares were up 242.60p to 1,153p after it agreed to a cash and shares offer from Shell that would value each BG share at about 1,350p.

Royal Dutch Shell 'A' shares fell 5.3% while Royal Dutch Shell 'B' shares dropped 8.6%.

The FTSE 100 fell 24.36 points to 6,937.41, but energy shares saw gains in the wake of the deal.

BP shares rose 0.5%, Ophir Energy climbed 7.4% and Tullow Oil jumped 4.4%.

"Already the largest FTSE 100 constituent by a considerable margin, this deal will further consolidate Shell's position in that regard," said Richard Hunter at Hargreaves Lansdown Stockbrokers.

"There are clear attractions from Shell's viewpoint, including its additional exposure to LNG, almost immediate cost synergies and, in due course, asset sales from a partial break up of BG's operations."

Shares in satellite broadcaster Sky rose 1.6% following reports that French media group Vivendi was mulling a possible bid for the firm.

The Reuters news agency cited three unnamed sources familiar with the matter as saying a bid for Sky was one of a number of options being looked at to expand Vivendi's TV group Canal Plus.

On the currency markets, the pound rose 0.78% against the dollar to $1.4925 and was up 0.76% against the euro to €1.3799.