Market Report: City backs ITV to benefit from penny-pinching Beeb

While Auntie penny pinches, ITV will feel the benefit. That was the theory pushing the Britain's Got Talent broadcaster higher yesterday as – with the BBC on a mission to save money – City scribblers argued its bitter rival will be in a prime position to take advantage.

Telling investors to pile into the group, Exane BNP Paribas' Nicolas Didio claimed the "full impact of the BBC's downsizing on ITV's cost structure is yet to come".

As well as the Beeb being less competitive in the battle for sports rights, the analyst added that ITV will be able to get better value for money when making deals with studios and recruiting talent such as news anchors and pundits.

"We estimate that 85 per cent of its broadcasting and online division's costs are sensitive to the BBC's measures," noted Mr Didio, who also said he was more positive on the effect of current advertising trends on ITV than a number of its European peers.

As a result, he bumped up his earnings forecasts and raised his price target by more than a quarter to 108p, as ITV finished the session 3.3p stronger at 88.1p.

The FTSE 100's rally this week gathered pace, with the top-tier index surging up 100.67 points to 5,766.95. Decent demand for Spain's debt auction helped, as did encouraging German economic sentiment data and forecast-beating results from a number of US giants including Coca-Cola and Goldman Sachs.

Barclays raced up 9.75p to 220.55p after Bank of America Merrill Lynch tempted investors in by saying there could be earnings upgrades ahead.

At the same time, Lloyds and Royal Bank of Scotland – both of whom had also dropped over the last couple of sessions – were lifted 1.24p to 30.95p and 0.93p to 25.2p respectively.

Meanwhile, Standard Chartered bumped up 54p to 1,553p amid speculation over the possibility of Singapore state investor Temasek selling its 18 per cent stake in the emerging markets bank.

After GDF Suez was forced earlier in the week to up its offer in order to win full control of International Power (0.1p ahead at 416.9p), thoughts were turning towards who else in the sector could attract takeover activity. Saying a lot of M&A among the utilities has focused on the UK, Canaccord Genuity's Harold Hutchinson said this theme was "unlikely to go away".

He picked out Centrica, saying it "may be of interest... to the more 'electricity heavy' EU utility groups in future". However, with a number of defensive stocks left towards the bottom of the Footsie as investors went for riskier choices, the British Gas-owner edged back 0.93p to 25.2p.

Burberry (down 94p to 1,492p) and Marks & Spencer (down 9p to 358.7p) were the worst two performers after updates from the retailers were greeted negatively, with the former admitting sales growth had slowed over the fourth-quarter.

On the FTSE 250, Afren shot up nearly as high as 153p in early trading after saying a major oil discovery in Kurdistan could be "transformational". Although the explorer eased back, by the bell it was still 8.5p stronger at 143p. Fellow Kurdistan drillers Heritage Oil (up 10.3p to 146.5p) and Aim-listed Gulf Keystone Petroleum (up 2.5p to 241.5p) were also ahead.

Afren has often been the subject of bid speculation, and traders claimed the latest announcement could only help its appeal. At the same time, Credit Suisse analysts said that – thanks partly to current high oil prices – they were expecting "an increase in M&A activity" in the sector.

Ophir Energy shifted up 27p to 532.5p after they highlighted it as one of the companies which are looking particularly attractive, while Falkland Islands driller Rockhopper (4p higher at 354p) was another, as was Soco International (10.1p higher at 296p), although it was also downgraded to "underperform" by the Swiss broker.

Logica was helped up 3.45p to 82.0p by Investec removing the IT outsourcer's "sell" rating. However, the broker's analysts were hardly gushing, saying that although another profit warning "cannot be ruled out... [it] seems unlikely to happen so soon in the financial year".

Futura Medical was 3.5p better off at 101p on Aim as speculation was revived claiming the condom-maker could be in line for an approach from Reckitt Benckiser (up 52p to 3,612p). Traders, however, were not particularly impressed by the chatter.

There was more solid bid news around penny stock Plus Markets. The junior exchange, which put itself up for sale in February, rose 0.05 per cent to 1.02p after announcing it was considering a number of possible approaches.

Following Argentina's move to renationalise oil firm YPF, Andes Energia – which operates in the country – was knocked back a huge 24 per cent to 34p.