Footsie hites two-and-a-half year high

The London market hit a two-and-a-half year high today as traders welcomed hints that interest rates will stay on hold.

The London market hit a two-and-a-half year high today as traders welcomed hints that interest rates will stay on hold.

The FTSE 100 Index ended the first trading session in 2005 32.7 points ahead at 4847. Earlier in the day, the Footsie topped the 4851.7 it reached in June 2002.

Figures showing that net mortgage lending rose at the slowest pace since June 2002 quelled fears among traders of an interest rate rise early in the New Year.

Data revealing a slowdown in the rate of growth in UK manufacturing last month further allayed the concerns.

Lower oil prices were helping sentiment, with the cost of a barrel of US light crude for February delivery lifting just 18 cents to 42.30 US dollars in afternoon trading after falling more than a dollar yesterday.

That retreat was due to lower demand for heating oil caused by warmer weather in the north eastern US.

However, US stocks opened on a low note after a surprise jump in US factory orders for November fuelled inflationary fears on Wall Street.

The Dow Jones Industrial Average dipped 13 points in early trading and stood five points off its opening mark shortly after London’s close.

On a quiet start to trading in London, the biggest corporate news came from outside the top flight.

High street chain Woolworths was second in the list of FTSE 250 fallers, down 5% or 2.25p to 37.75p, after it said that in the four weeks to Saturday like-for-like sales from its core estate of 806 shops were flat against the previous year.

Retail counterpart Body Shop was hard on its heels, lifting to third in the second flight fallers with a 5% or 8p loss to 152.5p. However, fellow retailer N Brown was fifth in the FTSE 250 risers with a 5% or 6p lift to 126p.

Shire Pharmaceuticals topped the Footsie risers after weekend share tips and a broker’s comment that a deal with US drug group New River would mitigate generic competition for Shire’s Adderall XR drug. Shares were up 5% or 30p to 577p.

But oil giants BP and Cairn Energy weakened – off 3p and 40p to 505p and 1050p respectively – as investors reacted to the fall in the cost of crude. Shell, however, gained a penny to 445p.

Mining company Xstrata topped the Footsie fallers, down 44.5p to 887.5p, after Australian rival WMC Resources rejected the former’s latest takeover offer as too low.

Leisure group Whitbread saw its stock gain nearly 2% or 15.5p to 862p after it rejected speculation that it planned to demerge its chain of David Lloyd fitness clubs.

It said the 65-strong leisure chain was an “excellent business” that it would continue to invest in.

The day’s biggest winners included Shire Pharmaceuticals, up 30p to 577p, Royal & Sun Alliance lifting 3p to 80.5p, William Hill adding 19p to 583p and BT gaining 6p to 209p.

Biggest losers were Xstrata, down 44.5p to 887.5p, Antofagasta falling 50p to 1071p, BHP Billiton drifting 24.5p to 586p and Cairn Energy off 40p to 1050p.

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