FTSE bouyant despite late oil prices fall

A late fall in the price of oil failed to dent the strong momentum driving the London market ahead today.

The price of a barrel of US light crude fell back to just over 42 dollars following a resolution of the impasse between Moscow and oil group Yukos.

But oil stocks still made big gains, helping the FTSE 100 Index to lift 62.5 points to 4418.7 by the close.

BP and Shell both surged after oil prices hit a record 42.90 dollars in New York last night, with the former notching up a 3% or 16p rise to 513.75p and the latter gaining 2% or 10p to 400p.

The market also appeared unfazed by the growing certainty of an interest rate hike next month following the latest data on house prices, which soared 2.1% during July, according to Nationwide Building Society.

This was in contrast to previous evidence that the market was beginning to slow down.

Investors in New York were also in positive mood, with the Dow Jones Industrial Average gaining 13 points shortly after London’s close.

In the Footsie, chemicals-to-paints group ICI was the highest Footsie riser after continued benefits from its restructuring drive helped it post a 23% rise in half-year profits. Shares increased by nearly 12%, or 24.25p to 229.5p.

Shire Pharmaceuticals was the second highest riser, adding 10% or 44p to 480p, after issuing a maiden dividend today as it posted a 27% rise in second-quarter profits.

Mining groups were also doing well after brokers greeted better-than-expected first half results from Rio Tinto with upgrades. Rio was fourth in the Footsie risers, lifting 49p to 1411p, while BHP Billiton increased 14.5p to 501p and Antofagasta put on 24p to 989p.

Insurer Legal & General cheered 1.5p to 98.25p after it reported a sharp rise in new business in the UK.

However, British Gas group Centrica lost earlier gains to end the day a penny down at 237p, after it signalled household bills may have to rise for a second time this year as it battles against rising energy costs.

In contrast, telecoms giant BT was near the top of a handful of fallers – down 4.5p to 190.25p – despite surprising investors with higher-than-expected profits.

It was joined by engines giant Rolls-Royce, which dropped 4.75p to 242.75p even though it announced that interim profits had risen sharply and its order book reached a new record.

Outside the top flight, shares in Alfred McAlpine plunged more than 8%, down 23.75p to 260p, after it posted an 8% fall in interim pre-tax profits after stripping out costs incurred in a recent court case.

Meanwhile, Virgin Mobile advanced 1.75p to 190.75p as it overcame tough competition in the pre-pay market to ensure a positive reception for its first trading figures as a listed company.

The day’s biggest risers included ICI, up 24.25p to 229.5p, Shire Pharmaceuticals ahead 44p to 480p, Hays climbing 4.5p to 123p and Rio Tinto putting on 49p to 1411p.

Biggest fallers were Amvescap, down 19.75p to 285.5p, Smith & Nephew weakening 13.5p to 546p, BT Group off 4.5p to 190.25p and Rolls-Royce down 4.75p to 242.75p.