Footsie moves into positive territory

The FTSE 100 Index moved into positive territory today as tensions ahead of the Bank of England’s interest rate announcement were released.

After a difficult start to the session, the benchmark index had moved back towards break-even point as the key announcement loomed.

And news of the expected 0.25% rise – the first increase in almost four years - removed any lingering uncertainty, sending the Footsie up 25.9 points to 4329.3 by lunchtime.

Traders will now be looking across the Atlantic for fresh impetus although market watchers expect Wall Street’s Dow Jones to open slightly weaker.

Financial stocks – both mortgage lenders and savings providers – reacted positively on the whole to the interest rate announcement.

Insurer Prudential led the way, gaining 10.5p to 479.25p while Aviv climbed 8p to 488.5p, and Royal & Sun Alliance was up 1.25p at 90p.

Among the banks, Halifax owner HBOS was up 11p at 697.5p and HSBC climbed 3p to 895.5p. The only exception was Royal Bank of Scotland which eased 3p to 1548p.

While corporate news did little to move top flight shares, publishing group Pearson’s announcement that it had landed a seven-year contract to process results of driving theory tests put it at the top of the Footsie risers board.

Its shares gained 4% or 23.75p to 654.75p.

And results from investment group 3i received a positive reception with shares gaining 16.75p at 629.5p.

Retailer Boots also recovered ground to sit 1.5p lower at 715.5p by lunchtime. It had earlier warned of margins coming under pressure in the second half of its financial year.

Results for the first half showed profits ahead 10.7% and also contained a pledge by chairman Nigel Rudd to revitalise the group.

Meanwhile, shares in airports operator BAA were off half a penny at 476.5p after reporting a fall in half-year profits.

The company stuck by forecasts of 4% annual passenger traffic growth, with a record August figure helping to offset the effects of the Iraq war and SARS earlier in the year.

Most of the main movement was outside the top flight, with pubs group Punch Taverns surging 16% or 55.75p to 405.25p after announcing a deal to buy the Pubmaster estate. Rival Enterprise Inns was also doing well, gaining 3% or 25p at 866.5p.

But a 25% easing in third quarter losses did nothing for shares in cable group Telewest which slipped 4% – a fall of 0.08p to 2.05p.

Meanwhile, sugar and starch giant Tate & Lyle climbed 11.75p to 325.75p after reporting a 14% fall in pre-tax profits – broadly in line with City forecasts.