GKN shares top FTSE 100 on Volvo deal Fresh bid activity gave traders some relief from the travails of the banking sector and sent GKN to the top of an otherwise lacklustre FTSE 100 on Thursday. The engineering group said it agreed to buy the aerospace business of Sweden's Volvo, paying £513m for Volvo Air's equity, plus a pension settlement of £50m and working capital refinancing of £70m. It will fund the deal via new debt and a £140m share placing. "The deal has happened a fraction earlier than we anticipated but a cracking price," said Harry Philips, analyst at Oriel Securities. This is a defining moment for GKN with [its] aerospace [unit] now set to account for 40 per cent of [group] earnings. GKN's shares were 10.4 per cent higher at 206.1p. It was the best showing on London's benchmark index by a clear margin. The FTSE 100 opened unchanged at 5,684.78 in cautious exchanges ahead of monetary policy announcements from the Bank of England and the European Central Bank (ECB). There were hopes that the BofE's monetary policy committee (MPC) would engage in further economic stimulus by creating new money to buy bonds from banks in an effort to stimulate lending in order to help lift the UK economy out of recession. Howard Archer, chief UK and European economist at IHS Global Insight, said: "We expect a further £50bn of QE to be announced, which would take the stock of QE up to £375bn. However, it is possible that the Bank of England could announce a £75bn extension to last over four months. This would take the programme through to November, when the MPC would have a new set of growth and inflation forecasts to digest. Meanwhile, dealers also hoped the ECB would cut interest rates by a quarter point to 0.75 per cent, a record low, in order to boost the eurozone's flagging economy. Traders were reluctant to take on fresh risk ahead of the decisions. London's banks remained under pressure, with the Libor rate manipulation scandal providing an unsettling context to the sector. Royal Bank of Scotland was 0.9 per cent weaker at 212.8p. Barclays slipped 0.2 per cent to 165.8p.