FTSE rallies towards 4,000 barrier

The FTSE 100 Index was climbing back towards the key 4000 barrier today as investors swooped for retail and banking stocks.

Supermarket chain Safeway again surged to the top of the leaderboard as talk of a bidding war for the chain emerged.

And with hopes of encouraging jobs data in the US later today the Footsie was up 48.5 points at 3982.6 by lunchtime.

Safeway was ahead almost 6% following a 20% surge yesterday when it agreed a takeover by regional rival Morrisons.

The Times sparked rumours today by reporting that Sainsbury’s and Asda-owner Wal-Mart may now team up to launch a counter bid.

Safeway climbed 14.75p to 270.75p while Sainsbury’s edged ahead 0.25p to 258.75p in a strong end to the week for retailers.

Clothing chain Next continued to benefit from Wednesday’s resilient Christmas trading update and it rose 24p to 799p.

And of those reporting updates next week, Argos-owner GUS was up 18p to 571.5p while Marks & Spencer rose 10.5p to 335p.

Elsewhere, banks were moving up with Barclays ahead 11.75p to 398.5p and Lloyds TSB rising 10.5p at 450.5p.

And insurers were beginning to recover from losses earlier this week with Prudential up 19.75p to 446p and Aviva ahead 21p to 461p.

Analysts said stronger-than-expected German manufacturing figures had helped to boost morale in the City while hopes US unemployment figures could come in at under 6% were also helping to lift sentiment during a largely quiet session.

But Martin Dobson, head trader at NatWest Stockbrokers, said: “There’s not much momentum to the market at the moment.”

Among other heavyweights on the up were mobile phone giant Vodafone, ahead 3p at 121.75p, and oil group BP, up 5p at 425.25p.

The main drag on the Footsie was coming from engine maker Rolls-Royce, off 6p at 103.5p, and British Airways, down 3p at 135.5p.

Outside the Footsie, telecoms group Cable & Wireless was up by more than 18% after it unveiled a new chairman.

Richard Lapthorne will join from healthcare firm Amersham and the move seemed to please the City with shares up 8.75p at 56.75p.

Elsewhere, computer games specialist Game Group cheered the market after it benefited from a stunning turnaround in the run-up to Christmas.

Despite a difficult start to December, Game said a late surge would leave annual sales and profits at record levels. Shares rose 5.25p to 43.75p.