Wall Street trading lifts jittery FTSE

Share prices in London overcame initial jitters today after trading on Wall Street lifted spirits.

The FTSE 100 Share Index closed up 39.9 points at 3721.1 having fallen 27 points in early trading.

On top of fears of military action in Iraq, traders in New York had earlier been unnerved by data showing the United States had a record trade deficit in 2002.

With the Dow Jones Industrial Average closing 85 points down yesterday, the Footsie immediately opened on the back foot but recovered by following Wall Street’s lead.

The strongest gains were for tobacco group Gallaher as rumours continued to circulate in the City about a possible bid from rival British American Tobacco.

Gallaher shares steamed ahead gaining almost 7% – up 41p at 638p – while BAT gained 18p to 602p and Imperial Tobacco came second in the footsie risers board, up 46p to 990p.

Close behind was Capita, operator of London’s jam-busting congestion charging, finishing the first week of the controversial scheme with shares ahead by 11p at 238p.

Transport group Go-Ahead, which cheered investors by raising its dividend 40% to 7p a share, saw its shares rise 19p to 650p.

The biggest Footsie faller was engineering group Invensys as doubts persisted over its resilience to downturns following last week’s profits warning. Shares lost 7%, falling 1.25p to 16.25p.

Media group Granada lost 5.5% to 55.75p after Morgan Stanley warned that the success of Freeview could hit the value of both ITV companies Carlton and Granada.

The troubled group saw more than £600 million wiped from its market value in one day last week.

Early trading was slow with only results from mortgage bank Alliance & Leicester generating much interest in the Footsie.

A&L shares initially rose after it reported an 18% jump in full-year profits but closed 7.5p lower at 772.5p as investors digested the company’s cautious outlook as it warned of the “potential dangers of the economic climate”.

Elsewhere in the blue-chip index, BAE Systems slipped back for a second successive session – falling another 4.75p to 121.5p – following the company’s annual results announcement yesterday.

Outside the FTSE 100, shares in drugs specialist Xenova plunged 38% today to 23.5p after recruitment for trials of its lung cancer drug Tariquidar was suspended.

Hopes that the Slough-based company would break even by 2005 to 2006 had been pinned on the assumption that Tariquidar would come on to the market in that period.

Shares in office furniture-to-boilers group Bullough lost almost 17% of their value after it reported operating losses of £4.1 million, £400,000 more than the figure seen a year earlier. The shares closed at 6.25p, down 1.25p.

But Hotels group Thistle gained 7.5% in today’s trading after Singapore-based investment firm BIL International confirmed it was considering making an offer for the remaining stake it does not already own. The shares ended the day up 7.5p at 107.5p.

The top FTSE 100 risers were Gallaher up 41p at 638p, Imperial Tobacco up 46p at 990p, Capita up 11p at 238p and Old Mutual up 4p at 89.5p.

The main footsie fallers were Invensys down 1.25p at 16.25p, Royal & Sun Alliance down 5p at 84.5p, Granada down 3.25p at 55.75p and BAE systems down 4.75p at 121.5p.