FTSE goes past 4,600 mark

The FTSE 100 Index drove beyond the 4600 barrier today in a session of contrasting fortunes for two of the UK’s largest retailers.

Tesco was the subject of a spending spree by investors after it unveiled half-year profits of £822 million, which one analyst described as “truly astonishing”.

This helped to spur the Footsie to close at a new two-year high, up 28.9 points at 4608.4, and to offset further disappointment at Marks & Spencer, where sales continued to slide.

The US Federal Reserve, which is expected to announce that interest rates are to rise by a quarter of a percentage point, is likely to set the direction of the London market tomorrow.

The Dow Jones Industrial Average struggled for momentum early on as traders kept their powder dry ahead of the rates decision, but was still camped in positive territory with a gain of 10 points.

Tesco was the top riser among blue-chip stocks in London, up more than 3% or 9.75p to 285p, after revealing that profits had risen 24% in the first half and that it continued to attract customers from its rivals.

It was followed by Shell as investors looked forward to tomorrow’s strategy presentation by the oil group. Shares were up 2% or 9.75p at 432.25p.

Shell and rival BP were also benefiting from continuing strength in the cost of a barrel of US light crude, which remained above 46 US dollars in New York. BP shares advanced 9.5p to 538p.

The UK’s largest pubs group, Enterprise Inns, moved 1.5p higher to 590p after saying that trading was “comfortably” in line with expectations.

It also announced the departure of the managing director of Unique Pub Company, which was acquired by Enterprise earlier this year.

Marks & Spencer was in the red, weakening 4p to 341.5p, after saying clothing sales during the summer had been difficult.

The trading update came as the company said shareholders could get 10% more than the retailer’s current share price from its £2.3 billion share buyback.

Rival Sainsbury’s was also in the doldrums, weakening 2.25p to 272.5p, while Boots retreated 16.5p to 663p.

Media stocks were proving a drag on the market, with WPP falling 3p to 519p and ITV off 2p to 110.25p.

Newcomer Cairn Energy was also in negative territory on its second day in the Footsie, falling 15p to 1500p.

Outside the top flight, troubled nuclear power group British Energy dipped more than 11% or 2.5p to 19.5p despite speculation that it would receive European Commission approval tomorrow for its debt restructuring deal.

The company said today that it had launched court action against an investor to prevent it derailing the rescue package.

The biggest risers in the Footsie today were Tesco, up 9.75p to 285p, Shell adding 9.75p to 432.25p, BHP Billiton up 11.5p to 562p and Barclays adding 10.5p to 541.5p.

The heaviest fallers were Boots, off 16.5p to 663p, Reckitt Benckiser falling 33p to 1378p, ITV off 2p to 110.25p and Sage Group falling 2.25p to 170.25p.