FTSE on the front foot

BT’s £9bn (€10.2bn) pensions black hole caused further anxiety for investors today after it revealed that the Pensions Regulator still had “substantial concerns” about the company’s plans for tackling the deficit.

The stock slumped 8%, or 10.5p to 120.9p, even though the telecoms firm reached agreement with trustees about addressing the shortfall over 17 years. BT’s third quarter results were also slightly ahead of expectations.

The wider London market was on the front foot, with the FTSE 100 Index 49.1 points stronger at 5181.2 after EU leaders agreed a deal to support the debt-laden Greek economy.

Spirits were also lifted by mining firms after Rio Tinto recorded a 33% increase in net profit for 2009 due to record sales of iron ore and an increase in copper and gold production.

Rio shares jumped 67.5p to 3207p, a gain of 2%, while BHP Billiton lifted 44.5p to 1901p and Antofagasta added 19.5p to 866p.

The top spot in the FTSE 100 Index was reserved for engine giant Rolls-Royce, which defied earlier City expectations for a drop in underlying profits by revealing a 4% rise instead.

Announcing a record order book of £58.3bn (€66.14bn) at the end of 2009, chief executive John Rose said the company’s performance in 2010 should match last year in terms of revenues and profits.

Shares responded to the guidance by rising 7% or 34.2p to 523p.

Results from medical devices firm Smith & Nephew also received a favourable response as stockbroker Charles Stanley upgraded its rating from hold to buy after a strong fourth quarter performance.

Shares rose 28p to 661p, a gain of 4%, as the company also noted signs of stability in its key markets.

As well as the sharp drop for BT, Diageo shares fell after the drinks company reported slightly lower first half profits as recession-hit drinkers switched away from premium brands towards cheaper lines.

Shares in the Guinness-to-Smirnoff firm were 34.5p lower at 990.5p.

Banks were also lower as Lloyds dropped 1.4p to 48.6p, Barclays fell 7.5p to 270.4p and Royal Bank of Scotland slipped 0.4p to 32.2p.

Outside the top flight, shares in Sports Direct International jumped almost 8% after it raised earnings guidance for the year to April – the second time it has done so in the last two months. With Competition Commission officials also clearing its acquisition of 31 JJB stores, shares rose 7.4p to 104.4p.

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