London shares maintain momentum

London’s leading shares maintained their upward momentum today as another psychologically important barrier moved into view.

The FTSE 100 index rose 29.1 points to reach 4179.2 at lunchtime after a strong performance overnight from the Dow Jones Industrial Average helped set the market off on the right foot.

Following a tentative start to the week, with the Footsie stuck at around 4100, investors now appear confident the blue-chip index can breach the 4200 barrier as the mood slowly improves in the City.

Among individual stocks, Royal Bank of Scotland built on the sharp rise achieved yesterday after it announced plans to buy Churchill Insurance and issued a positive trading statement.

RBS shares rose 18p to 1740p while Barclays lifted 13.75p to 465.25p and Lloyds TSB gained 6.25p to 455.75p.

Other risers included support services and distribution company Hays, up 2.5p to 96.25p despite confirmation that it will be relegated from the Footsie next week. Fellow distribution company Exel lifted 21p to 681p.

Heavyweights from the oil and telecoms sectors were also benefiting from the London market’s improved sentiment.

Vodafone rose 1.75p to 125.75p, BT Group cheered 3.5p to 198p and mmO2 lifted 0.25p to 57.25p while BP gained 12p to 451p and Shell added 7.25p to reach 426.5p.

Outside the top flight, discount retailer Matalan surged more than 12% or 22p to 192p, as the market speculated that founder and executive chairman John Hargreaves could be about to sell to Asda owner Wal-Mart.

Matalan, which denied it had received any bid, was closely matched on the FTSE 250 risers board by lastminute.com, which rose 15p to 177.5p after launching its service to 6.7 million Sky digital households in the UK and Ireland on Sky Active.

Elsewhere, security products group Chubb was again on the up after ending days of speculation and announcing that it had agreed the terms of a £622 million takeover by US giant United Technologies.

Chubb described the widely-anticipated 75p-per-share offer as “fair and reasonable”. Shares rose 2.5p to 75.25p.

Infrastructure services company Jarvis, which announced an annual profits rise of 37% today, rose 3p to 339p at lunchtime, although the rise was not as great as the 10p surge achieved at the start of trading.

Jarvis cheered investors by forecasting that early-stage profits from its London Underground project would be £5 million higher this year than envisaged.