Barclays news inspires FTSE

Barclays led the FTSE 100 Index back towards the 4600 barrier today as investors warmed to news that it was seeking to expand in Africa.

The bank recouped nearly all its losses of yesterday to rise 4% and lift many of its rivals higher as the Footsie closed 9.8 points up at 4578.1.

Support was also offered from the United States where orders for durable goods beat expectations, suggesting the economy was stronger than previously thought.

However, the move into positive territory by the Dow Jones Industrial Average was restrained by concerns that the US Federal Reserve may now hike interest rates again this year.

The price of a barrel of US light crude remained above 48 US dollars today after touching 49 dollars yesterday, prompting fresh concerns about consumer spending and company profits.

In London, Barclays gained 4% or 20p to 540p after revealing that it was in talks to take a majority stake in one of South Africa’s four biggest banks, Absa. The rise came despite the group going ex-dividend.

Positive sentiment in the sector helped most of its rivals to advance, with Royal Bank of Scotland putting on 21p to 1617p, Lloyds TSB progressing 1p to 428.75p, Northern Rock advancing 6p to 731.5p and HBOS adding 3p to 752p.

The few losers included Abbey National, down 2.5p to 552.5p and HSBC, retreating a penny to 883p.

Confectionery group Cadbury Schweppes was second in the Footsie fallers, down 8.25p to 426.75p, after it said full-year profits would be at the lower end of expectations following a difficult summer for its continental European soft drinks business.

In the FTSE 250 Index, business telecoms group Thus was the biggest faller, losing 4p to 13p, after saying first-half earnings would fall short of last year in the face of tougher trading conditions.

Rival Colt Telecom was close behind it in the index with a 2.75p loss to 43.75p. Top-flight telecoms group Cable & Wireless also suffered from the news, topping the Footsie fallers with a 2p drop to 100.75p.

Furniture group Courts was having a bad day, slumping nearly 10% or 7.5p to 65p after it said Hurricane Ivan and an overhaul of its UK business would sting profits.

But Sussex car dealership Caffyns picked up speed, gaining nearly 3% or 17.5p to 645p as it revealed that it was in line for a £3.4 million refund from Customs & Excise for overpaid VAT.

Glass maker Pilkington also made progress – up 2p at 87.75p – despite revealing that the strong pound and rising energy prices had kept half-year profits at the same level as last year.

The biggest risers in the Footsie today were Barclays, up 20p to 540p, Reuters adding 8.75p to 326p, Hanson up 10p to 390.25p and Dixons adding 3.75p to 167.5p.

The heaviest losers were Cable & Wireless, down 2p to 100.75p, Cadbury Schweppes off 8.25p to 426.75p, Royal & Sun Alliance down 1p to 72.25p and BAT off 10p to 807.5p.