FTSE reverses downward trend

The London market reversed three consecutive sessions of losses today and quashed fears the FTSE 100 Index was heading for a new eight-month low.

The London market reversed three consecutive sessions of losses today and quashed fears the FTSE 100 Index was heading for a new eight-month low.

The Footsie closed 18.3 points up at 4339.4 after receiving a significant boost from pharmaceutical companies.

Earlier in the day, the index had dipped below the key 4300 barrier.

Trading in New York was lending little positive impetus, with the Dow Jones Industrial Average just five points higher by London’s close.

In the Footsie, AstraZeneca was third on the risers board with an increase of nearly 3% or 63p to 2345p as investors awaited Thursday’s update on its performance in the second quarter.

Rival GlaxoSmithKline also cheered 20p to 1062p and Shire Pharmaceuticals added 9p to 445p after reassuring investors that a regulatory delay in the US would not prevent its Fosrenol drug from launching on time.

One analyst said better-than-expected second quarter results from Swiss drugs company Novartis had boosted confidence in the sector.

Leisure group Whitbread advanced 4.5p to 844.5p after confirming it was in exclusive talks to buy budget hotel chain Premier Lodge in a deal thought to be worth £540 million.

However, financial stocks were proving a drag on the market with Abbey National the heaviest faller, weakening 11p to 469p, and Royal & Sun Alliance off 1.25p to 76.75p.

Mortgage lender Northern Rock shrugged off a negative start to stand unchanged at 693p by the end of the session. It came after the group said continued strong demand for remortgaging would offset the impact of rising interest rates.

Soaring oil prices failed to lift spirits at Shell, which lost half a penny to 398p, although rival BP was unchanged at 494.5p. A barrel of crude cost just over 41.60 US dollars in New York – bringing the price close to the 42.45 record high notched up last month.

The news had a downward effect on British Airways, whose stock lost 1.5p to 236p and headed the Footsie fallers earlier in the session, despite comments at its annual meeting that it was on track for recovery.

Progress was also held back by news that two companies planning to float this week had slashed their flotation prices.

Branston Pickle owner Premier Foods was forced to revise down the price of its long-awaited flotation, with 215p a share marking the bottom of the new range unveiled yesterday. It climbed to 219p during the first day of conditional dealings.

Virgin Mobile has also cut its offer price by 15% in an effort to stimulate interest among investors.

Elsewhere, shares in mining group UK Coal slipped more than 6%, or 9.75p to 146.75p, after it revealed that first half sales had fallen by a quarter.

The highest risers in the Footsie today were Smith & Nephew up 17.5p to 570.5p, 3i Group ahead 16p to 586p, AstraZeneca up 63p to 2345p and Man Group ahead 34p to 1431p.

The heaviest fallers were Abbey National down 11p to 469p, Antofagasta off 21p to 979p, Cable & Wireless down 2.25p to 113.75p and Hays off 2p to 119.75p.

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