Morrisons sales boost FTSE

Supermarket chain Morrisons dragged the FTSE 100 Index into positive territory during a rollercoaster session for blue-chip stocks today.

After months in the doldrums, Morrisons came back into favour with investors as its shares closed 15% higher on the back of buoyant sales growth at converted Safeway stores and an acceleration in the transformation of remaining outlets.

With mining stocks also back on form, the Footsie wiped out lunchtime losses to finish the session up 1 point at 4617.4.

However, investors remained wary of adding too heavily to their portfolio after fears of another interest rate hike before Christmas resurfaced.

Speculation that the Bank of England may be tempted into raising the cost of borrowing again followed the publication of figures showing an unexpected rise in retail sales last month, contradicting signs that the economy is slowing down.

The Dow Jones Industrial Average was turning in a similarly lacklustre performance as it moved closer to within 70 points of a new low for 2004.

Back in London, investors were seeing more reasons to shop in Morrisons after the group said the conversion of Safeway stores could be completed by the end of next year. Morrisons topped the Footsie risers with a 28.5p gain to 222.75p.

Drugs group AstraZeneca gained 44p to 2218p after reporting a 7% rise in sales in the third quarter.

One trader described the results as “not a bad effort at all”, with sales of ulcer drug Nexium and cholesterol-lowering treatment Crestor quite positive.

Miners were making up yesterday’s losses in the sector after BHP Billiton reported strong third-quarter production.

BHP was ahead 8.5p at 567.5p, while Xstrata put on 21p to 874p and Rio Tinto advanced 29p to 1450p.

Wine and spirits group Allied Domecq lost hold of early gains to fall 4.25p to 486.75p despite saying a strong performance from its core brands had helped it boost full year profits by 6%.

Insurer Prudential was spared the ignominy of becoming the heaviest loser among top-flight stocks for the third session in a row.

Although the Pru weakened a further 5.75p to 386.25p, it stood behind waste and water group Severn Trent on the fallers board. Severn Trent was off 15p at 904.5p.

Outside the top flight, shares in troubled china maker Royal Doulton were catapulted 31% higher by news that it was in talks about a takeover by rival Waterford Wedgwood.

In a session when Doulton was ahead by 2.63p at 11p, Waterford Wedgwood went the other way as its shares eased €2.65 to €6.25.

A potential bidding battle for Kidde drove its shares more than 17% higher. News that the fire equipment group had knocked back a takeover approach failed to put off investors, as Kidde shares advanced 21.5p to 145p.

The day’s biggest risers were Morrisons, up 28.5p to 222.75p, Reuters ahead 15p at 363p, Xstrata lifting 21p to 874p and Scottish & Newcastle gaining 9.25p to 406.75p.

Biggest fallers were Severn Trent, down 15p to 904.5p, Prudential off 5.75p to 386.25p, ITV losing 1.5p to 106.25p and Centrica shedding 3.25p to 232.5p.