Footsie benefits from NY sentiment

London’s FTSE 100 Index edged closer to the 4200 barrier today after benefiting from improved sentiment in New York.

The upbeat tone was set early on by the Dow Jones Industrial Average’s strongest close in 11 months following positive US economic news.

The Footsie surged almost 50 points in the opening minutes of trading and held on to those gains to close 37.5 points stronger at 4190.4.

However, the 4200 barrier, which would provide another landmark in the recovery of the London market, was a step too far. At one stage the Footsie reached 4199.1 before retreating.

The chances of a late push beyond 4200 was also not helped by a more subdued start to trading on Wall Street following the previous session’s 2% rise for the Dow Jones Industrial Average and the tech-laden Nasdaq.

Further healthy economic news should have provided another lift for US stocks but investors preferred to take profits after yesterday’s strong run.

Financial stocks were among those to benefit from the improved sentiment in London, with Lloyds TSB up 20.25p at 476.75p after a positive broker update. HBOS also rose 13.5p to 805.5p and Barclays added 6.25p to 467.25p.

Only Abbey National bucked the trend in the sector, easing 8p to 512p ahead of an eagerly awaited trading statement tomorrow.

In the retail sector, B&Q-to-Comet group Kingfisher was under pressure – down 10.5p at 272.25p – after a broker downgrade in the wake of details of the long-awaited demerger of its electrical business Kesa, which includes Comet.

Rival electrical retailer Dixons showed a 4.25p rise to 112p. Among other retailers, supermarket giant Tesco added more than 3% or 6.5p to reach 217p.

Elsewhere, Granada and Carlton were in positive territory after the Competition Commission’s deadline for ruling on their £2.8 billion merger was extended to allow consideration of two further remedies to avoid the deal being blocked.

That was viewed as a positive development for the tie-up as Granada shares rose 1.25p to 86p, while Carlton lifted 4.25p to 135p in the FTSE 250 Index.

Outside the top flight, Rolls-Royce continued to rally as it moves towards its return to the FTSE 100 Index next week.

Two major engine orders in as many days, including today’s deal with EgyptAir, boosted the aerospace group’s shares 5.5p to 132.5p.

Toy retailer Hamleys also lifted 8p to 202p after Icelandic retailer Baugur announced it was behind a management buyout of the prestigious Regent Street toy store group.

Also in the sector, department store group House of Fraser added 2p to 89p – a 2% rise – after reporting a “creditable” first 20 weeks of its financial year.

The biggest Footsie risers were Lloyds TSB up 20.25p at 476.75p, Hilton Group ahead 8.25p at 194.75p, Hays up 4p at 97.5p, Dixons ahead 4.25p at 112p.

The biggest fallers were Kingfisher down 10.5p at 272.25p, Scottish Power off 8p at 367p, Gallaher down 12p at 578p, and Abbey National off 8p at 512p.