FTSE draws clear of 4000 mark

The London market rallied today as blue-chip shares raced ahead after a spate of hefty losses.

The FTSE 100 Index gained ground throughout the session to close up a weighty 168.7 points at 4190.6.

That put the top flight within touching distance of the 4200 mark but few were prepared to gamble on the start of an upward trend.

Alex Scott, equities analyst at Seven Investment Management, said trading had been encouraging although much of it had been driven by bargain hunters.

He added: ‘‘We’re in a very volatile market with an overall downward trend.

‘‘There are always going to be rallies within that, some of which will be quite strong. But it will be a brave investor that says we have seen the bottom and are moving up.’’

The US was also trading higher this afternoon and at one stage the Dow Jones Industrial Average galloped ahead 249 points.

It was unable to hang on to the improvement, however, and by London’s close the Dow Jones had steadied and was trading around 100 points higher.

And as with London, few were convinced it represented the start of a solid recovery.

In London, financial stocks rebounded strongly after taking a severe pounding in recent weeks.

Asset manager Amvescap surged ahead 49½p at 480p, a near 12% improvement that saw it top the FTSE 100 risers board.

Among the banks, Barclays added 42½p at 475p, HBOS was up 51p at 607½p, Lloyds TSB gained 49p at 607p and Royal Bank of Scotland shot up 119p to £16.00.

Elsewhere, Friends Provident gained 12¾p at 147¾p and Prudential put on 30½p at 493p.

The telecom sector was helped by a good performance in Europe, led by Deutsche Telekom gaining on the promise of cost cuts following the departure of its chief executive yesterday.

In London, Vodafone put on 5p at 96½p, rival mmO2 gained 1¾p at 46½p, former parent BT added 5¼p at 238¼p and Cable & Wireless strengthened 4¾p at 168¾p.

British Gas group Centrica was also rebounding, climbing 17¼p at 172¾p, after moves to reassure investors yesterday about its accounting procedures.

And news of further fare reductions by British Airways were welcomed in the City as its shares took off 8%, up 11¾p to 159½p.

Among corporate news today, Cadbury Schweppes reversed an early fall to close 14p higher at 439p.

The chocolate-to-fizzy drinks group today served up interim results in line with City expectations.

But Anglo-Dutch steelmaker Corus slipped 2½p to 70p after revealing plans to merge with Brazil’s CSN in an all-share deal.

Analysts said the shares were down in reaction to the large premium the group is paying for CSN.

Among smaller stocks, football club Leicester City slumped 38% or 5p to 8p after warning of cashflow problems.

The side, which was relegated from the Premiership last season, is in talks to raise fresh capital and is also considering selling more players.

Back in the FTSE 100, the biggest risers were Amvescap, up 49½p at 480p, Centrica, up 17¼p at 172¾p, Barclays, up 42½p at 475p and Friends Provident, up 12¾p at 147¾p.

The heaviest fallers were Invensys, down 3½p at 73½p, Gallaher, down 21½p at 558½p, Corus, down 2½p at 70p and Xstrata, down 19p at 690p.