London shares close up, at intraday high; M&A fuels insurance, airlines UPDATE.

(From AFX Europe (Focus))

(Updating with full details)

LONDON (AFX) - Leading shares closed firmly ahead, at an intraday high, with M&A talk fuelling gains in the insurance sector and a large deal in the US buoying airline stocks, while Wall Street remained on positive terrain, dealers said.

The FTSE 100 index ended Wednesday's session 43.2 points ahead at 6,229.8, while the broader indices also rallied.

Volume was solid, with 3.04 bln shares changing hands in 389,785 deals.

Meanwhile, across the pond, US stocks were marked higher as investors examined an 8 bln usd bid from US Airways Group for Delta Air Lines and awaited minutes from the Federal Reserve's meeting last month for hints on what the central bank may do in 2007.

The Dow Jones was up 18.20 points at 1,396.35 at the UK close, while the Nasdaq Composite rose 10.14 points at 2,440.80 and the S&P 500 index ended 3.15 points ahead at 1,396.35.

In London, staying with economic news, the Bank of England's latest quarterly Inflation Report released earlier today proved to be fairly dovish and provided some cheer. The BoE said UK inflation will return towards target quicker than it anticipated just three months ago, with the headline rate actually dipping below 2 pct if one more rate rise materialises.

On the corporate front, shares in British Airways were airborne following its announcement it has reached an agreement in principle with trustees of the New Airways Pension Scheme over a ten-year funding plan to tackle its 2.1 bln stg deficit.

The UK …