FTSE 100 rallies in wake of attacks

Sophie Hares

The gains were paced by Vodafone. Banks including Lloyds TSB and HBOS climbed, along with insurer Prudential.

The FTSE 100 rose for the ninth day in 10, adding 10.2, or 0.2%, to 5242.4.

It earlier touched 5257.90, its highest point since May 2002.

The benchmark has rallied as much as 4.7% since touching an intraday low of 5022.10 following the July 7 bomb attacks on the London Underground which killed more than 50 people and injured 700.

“There has just been a determination on the part of the market to push ahead,” said strategist Mike Lenhoff.

The FTSE 100 will “continue to show that resilience and move onwards”, he said.

“It wouldn’t surprise me if we hit 5300 by the end of the week or beginning of next week.”

Vodafone, the world’s biggest mobile-phone company, added 1.75 pence, or 1.3%, to 141 pence.

Lehman Brothers analysts recommended clients “switch to Vodafone”, saying the shares look cheap relative to those of BT based on estimated 2005 earnings.

BT added 0.75 pence, or 0.3%, to 229.75 pence.

Separately, Vodafone is not interested in T-Mobile USA as the US wireless unit of Deutsche Telekom is smaller than other operators in that market and doesn’t have a license for third-generation service, according to reports.

Lloyds TSB, the fifth-largest British bank by assets, rose 8 pence, or 1.7%, to 485.75 pence. HBOS, the No 4, rose 6.5 pence, or 0.7%, to 883 pence.

Goldman Sachs upgraded its recommendation on mortgage banks to “overweight” from “neutral”.

Amvescap, Europe’s largest publicly traded money manager, added 13.25 pence, or 3.2%, to 432.75 pence.

Amvescap has risen 26% since it received an unsolicited takeover offer last week from CI Fund Management, Canada’s third-largest fund manager.

Prudential, the UK’s second-biggest insurer, added 15 pence, or 2.9%, to 528.75 pence.

Citigroup is considering a possible £1 billion (1.45bn) bid for Egg, the internet bank majority owned by Prudential, according to reports.

Egg shares rose 8.1%, to 113.75 pence.

Oil stocks such as BP and Shell Transport & Trading weighed on the market as crude prices fell. Deutsche Bank analyst Adam Sieminski at Deutsche Bank downgraded his recommendation on Shell to “hold” from “buy”.

BP, Europe’s biggest oil company, fell 7.5 pence, or 1.2%, to 634 pence. Shell, which owns 40% of the Royal Dutch/Shell group, slipped 15.25 pence, or 2.7%, to 548.75 pence.

Crude oil dropped for a third day after Hurricane Dennis missed rigs and platforms in the Gulf of Mexico, easing concern about disruption to US supplies. Crude for August delivery fell as much as $1.61 (1.33), or 2.7%, to $58.02 (48.04) a barrel in electronic trading on the New York Mercantile Exchange.