Footsie stays positive

Steady progress for banks and insurers helped the FTSE 100 Index stay in positive territory today during a tough session for retailers.

After falling back from an early 25-point rise, the blue chip index approached lunchtime up 15.4 points at 4117.8.

The progress came as markets held firm following comments from Federal Reserve chairman Alan Greenspan that deflation in the US remained a threat, although he did also express hopes of stronger growth by the end of the year.

Insurance group Aviva, which yesterday announced plans to cut costs by reducing its headcount, led the risers board – up more than 4% or 20.75p at 493.75p.

Legal & General also put on 3p at 96.25p, Friends Provident gained 3.5p to 132.75p and Royal & Sun Alliance cheered 3.75p to 162.5p.

High hopes for the forthcoming banking reporting season helped the sector with Royal Bank of Scotland up 46p at 1776p and Barclays ahead 9p at 470p.

But further sales growth at recovering retail giant Marks & Spencer failed to inspire shares in the high street favourite.

Profit taking after a recent strong run and concern about the performance of the company’s home division offset the encouragement offered by a 3.8% rise in like-for-like sales for the first quarter.

M&S shares slumped 5% or 18.5p to 316.5p while a clutch of retailers followed M&S lower with Dixons down 2.75p at 140p, Next off 15p at 1077p and Argos owner GUS losing 9p at 714p.

As well as being hit by the retail gloom, high street chemists Boots and Alliance UniChem were again out of favour amid nervousness ahead of a forthcoming Government decision on deregulation.

Boots was off 7.5p at 646.5p while Alliance UniChem fell 13p to 489.75p

Outside the Footsie, discount retailer Peacock bucked the trend, rising 11p to 163p after reporting a “flying start” to its financial year because of fine weather in April and June. Like-for-like sales rose 10.8% in the first quarter.

One of the biggest rises of the session was reserved for GB Railways after the Hull Trains operator received a takeover approach from FirstGroup.

GB surged 18% or 48.5p to 320p as FirstGroup – interested in GB’s position in the bidding process for three rail franchises – said it would offer as much as 500p a share for the company. FirstGroup fell 3.75p to 260.25p.