FTSE closes above 4,000 mark

The London market managed to close with its head above the 4000 mark today, despite receiving a blow from Wall Street during afternoon trading.

US exchanges slumped on their opening on the back of unexpectedly-poor unemployment figures, while the shock resignation of treasury secretary Paul O’Neill also shook traders.

But as the surprise wore off, Wall Street stabilised and by the time London closed, US markets were trading around their opening levels.

The US news hit London in early afternoon, and saw the FTSE 100 Index slump 100.5 points to 3931.9 – but by the close of trading investors had recovered their poise and the Footsie ended just 18.9 points lower at 4013.5.

The drama from the US came in a quiet day for news in London.

Among stocks which weighed on the market were banking shares as they continued a bad run following disappointing updates from Lloyds TSB and Barclays earlier in the week.

Lloyds lost another 5p at 503.5p while Barclays slipped 9.5p at 406.5p and Standard Chartered fell 2p to 744p.

But Royal Bank of Scotland, which updates the market on trading next week, managed to reverse early losses to close 6p ahead at 1531p.

Among insurers, Royal & Sun Alliance was 3.75p lower at 133p and Aviva lost 5.5p at 504.5p while fund manager Schroders fell back 27.5p to 532.5p.

New economy stocks were also suffering, with mobile phone giant Vodafone giving up early gains to drop 0.5p at 117p, Cable & Wireless off 2.5p at 83.5p and software firm Sage slipped 4.5p to 146.5p.

Among media firms, news and information group Reuters was off 2.75p at 213p, Financial Times publisher Pearson eased 12.5p at 675p and advertising giant WPP shed 5.5p at 493.25p.

A handful of stocks were gaining ground, with water companies United Utilities and Severn Trent adding 1p at 610p and 26p at 646p respectively.

Pharmaceuticals giant GlaxoSmithKline was also given a boost on the back of an upbeat statement from US group Merck on Thursday, which said it expected next year’s earnings to beat estimates. GSK closed up 11p at 1170p.

In a quiet session for corporate news, announcements were largely restricted to smaller stocks.

House of Fraser put on 11% after it emerged entrepreneur Tom Hunter had made an indicative approach of 85p per share for the department store chain.

The offer has been rebuffed but hopes of a potential deal still buoyed the stock and shares climbed 8.5p to 86.5p.

Engineering group Frith Rixson also surged, up 3p at 25p. The 14% jump came after it received a £50 million takeover approach from private equity firm Carlyle, which is offering 25.75p cash for each share.

The biggest Footsie risers were Severn Trent, up 26p at 646p, BG Group, up 8.5p at 239.25p, Rolls-Royce, up 3.25p at 123.5p and Centrica, up 4.25p at 170p.

The heaviest fallers were Schroders NV, down 35.5p at 483p, Schroders, down 27.5p at 532.5p, Tomkins, down 7.75p at 200.25p and Amvescap, down 16p at 416p.