The FTSE 100 was buoyed on Wednesday by a 6.3% jump in Paddy Power Betfair shares after the bookmaker said it was in discussions to merge its US business with fantasy sports firm FanDuel.
The company’s shares ended the day up 490p at 8,250p, helping push the FTSE 100 up 0.15% or 11.22 points to 7,734.2 points.
The prospective deal is hot on the heels of a US Supreme Court ruling which struck down a federal law banning gambling on individual sporting events.
States will be able to choose individually whether to legalise sports betting.
David Madden, a market analyst at CMC Markets UK, said: “A change in US laws in relation to gambling has brought about this possible takeover.
“Should the deal go ahead, it would beef up Paddy Power Betfair’s US division, and in turn FanDuel would gain access to the risk and trading expertise of the Dublin-based bookmaker.
“Gambling regulations in the UK and Australia are becoming tighter, and this move would give the London-listed firm more exposure to the US.”
Across Europe, the French Cac 40 and German Dax ended the day higher, up around 0.2% each.
In currency markets, the pound was mixed, falling 0.2% versus the US dollar to trade at 1.347 and rising 0.2% against the euro to 1.143.
Brent crude prices were flat at 78.04 US dollars per barrel, as investors digested data from the Energy Information Administration which showed US oil stockpiles dropping less than expected.
In UK stocks, Micro Focus International was one of the biggest risers on the FTSE 100, up 78.5p at 1,347.5p after confirming that revenues would be at the better end of previous estimates.
It also announced it had secured a 40 million US dollar contract earlier than expected, and comes in the wake of a 45% share price slump sparked by a profit warning in March.
Burberry jumped 64.5p to 1,868p as it posted a 5% rise in bottom line pre-tax profits to £413 million as its overhaul started to bear fruit.
BT was one of the worst performers, down 3.8p at 203p, amid a pledge to bring all its call centres back to the UK and Ireland and converge its broadband and mobile networks.
Away from the top tier, Crest Nicholson tumbled 63.2p to 430.6p after reporting that flat property prices and higher costs were squeezing margins, which are now expected to come at the bottom end of guidance.
Marston’s fell 13.7p to 98.3p while Mitchells & Butlers tumbled 19.8p to 255.4p, as both pub groups took a first half hit on the back of wintry weather and higher costs.
All Bar One owner Mitchells revealed an 8% fall in half-year pre-tax profits to £69 million while rival Marston’s swung to an interim pre-tax loss of £13.4 million against profits of £36.7 million a year earlier after booking writedowns.
Shares in Moss Bros surged 5.75p to 52.8p as investors reacted to improved trading figures in the first quarter.
Like for like sales were down 5.2% in the 15 weeks to May 12 but were better than the figures seen in March of declines of 6.5%.
The biggest risers on the FTSE 100 were Paddy Power Betfair up 490p at 8,250p, Micro Focus International up 78.5p at 1,347.5p, Anglo American up 89.8p at 1,892.4p, and Glencore up 13.75p at 393.05p.
The biggest fallers on the FTSE 100 were Smurfit Kappa down 158p at 2,950p, Centrica down 7.5p at 140.9p, BT Group down 3.8p at 203p, and Royal Mail down 11.2p at 597.8p.