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Aviva share price drop

Shares in insurer Aviva fell more than 5pc yesterday, reflecting uncertainty about the potential benefits of the company's £5.6bn (€7bn) plan to merge with rival Friends Life.

The two insurers have agreed outline terms for a deal in which Aviva would offer a 15pc premium to Friends Life's share price to give those investors a 26pc stake in the new company.

The proposed transaction would create a market leader in British life insurance with a combined market capitalisation of about £20.2bn (€25.5bn).