FTSE cheers as Wall St looking up

The London market closed just shy of the key 4800 level today after a big retail deal boosted spirits on Wall Street.

The FTSE 100 Index extended earlier gains during the afternoon to end the session 25.5 points ahead at 4795.9.

US retailing stocks pushed the Dow Jones Industrial Average 113 points higher after store giant Kmart said it was buying rival Sears Roebuck for $11bn (€8.4bn) to create the third-biggest US retailer.

Good results from computer group Hewlett-Packard, lower oil prices and a falling dollar also pleased traders.

In London, positive economic data offset retailers’ fears about the Christmas season as investors virtually wrote off chances of an interest rate rise in the final month of this year.

It followed a fall in UK unemployment to its lowest-ever level between July and September and news that the Bank of England voted unanimously to keep the cost of borrowing on hold earlier this month.

But it was the impact of previous rate rises that was giving investors in the retail sector a headache, with Dixons off nearly 5% after the electricals group warned that sales were slowing.

Dixons lost 8.25p to 158.5p, after warning that consumers were increasingly cautious about splashing out on “big-ticket” items

A host of high street rivals followed it into the red with Marks & Spencer off 8.5p to 343.5p, B&Q owner Kingfisher down 4.25p at 298.75p, Argos-to-Homebase group GUS weakening 22p at 870.5p and Boots losing 16p to 637p.

However, mobile phone groups were driving the market forward after mmO2 said it would reward investors with a maiden dividend at the full-year stage.

Shares in mmO2 surged 5% or 5.5p to 111.5p on the back of this news and better-than-expected revenues and underlying earnings, while heavyweight rival Vodafone lifted 1.75p to 143.75p.

Second-tier rival Virgin Mobile improved 2% or 4.25p to 200p as investors awaited news of its half-year results tomorrow, which could also include a maiden dividend.

Insurers benefited from a speech by US Treasury Secretary John Snow yesterday which raised hopes of tort reform across the Atlantic.

Friends Provident was among those to benefit from the positive sentiment, rising nearly 4% or 5.25p to 148p, while Legal & General added 2.75p to 109.25p.

Royal & Sun Alliance was the best-performer in the sector as it gained nearly 8% or 5.75p to 79.5p, although analysts also cited rumours of a potential 100p a share bid from AIG.

Outside the top flight, temporary power specialist Aggreko advanced 2.75p to 159.5p after raising its guidance for full-year profits. The group reported a pick-up in demand over the summer following four major hurricanes in the United States.

But the woes for investors in French Connection continued as the fashion chain weakened a further 5p to 250p today after losing 16% of its value yesterday.

The day’s biggest Footsie risers were Royal & Sun Alliance, up 5.75p to 79.5p, mmO2 lifting 5.5p to 111.5p, Man Group gaining 58p to 1410p and Antofagasta adding 44p to 1130p.

The biggest losers were Dixons off 8.25p to 158.5p, GUS down 22p at 870.5p, Boots slipping 16p to 637p and Marks & Spencer losing 8.5p to 343.5p.