London shares rally

The London market has continued its pre-Christmas rally as traders shrug off a grim update from Pearson.

By the close of trading the FTSE 100 was up 14.8 points at 5151.1.

Trading was helped by a good close on Wall Street Monday night and a buoyant opening today.

The market's spirit failed to be dampened by Pearson, which saw shares slump 5% or 40p to 766p, as it warned of falling profits and more tough times ahead.

Life assurance stocks were suffering following a warning from French insurer Axa.

In London, Friends Provident was 8¼p weaker at 196¾p, Prudential fell 2p to 785p, Royal & Sun Alliance was 1¾p lower at 391¼p and CGNU fell 22p at 818p.

South African financial firm Old Mutual was also lower, down 4½p at 85½p. UK insurer CGNU revealed that the South Africa-based firm had pulled out of a deal to buy its Pakistani operations.

However, the falls were being partly counterbalanced by rises in banking stocks, with Barclays up 28p at £21.88, HSBC ½p stronger at 832p and Abbey National up 7p at 964p.

Other risers included British Airways, up 7%, or 13½p at 208p on continued speculation about whether its proposed alliance with American Airlines for transatlantic flights would be approved.

Outside the Footsie, logistics group Tibbett & Britten fell 3%, or 20p, to 600p after reporting sluggish clothing sales had hit profits at its fashion division.

Engineering group IMI also lost out, dropping 2p to 256p despite saying it would meet its full-year targets

The biggest Footsie risers were British Airways up 13½p at 208p, WPP up 38p at 740p, Granada up 7¼p at 143¼p and Arm up 18¾p at 371½p.

Fallers were Old Mutual down 4½p at 85½p, Pearson down 40p to 766p, Friends Provident 8¼p weaker at 196¾p and CGNU down 22p at 818p.