FTSE extends gains

The London market extended its gains today as investors welcomed further signals that the Bank of England will refrain from hiking interest rates next week.

After rising modestly in the first hour, the FTSE 100 Index picked up the pace to stand 22.7 points ahead at 4828.7 by mid-morning.

Traders took heart on the interest rate outlook from figures showing that growth in service sector activity in December dropped to its lowest since September.

In New York, shares moved lower for a sixth straight day – their longest losing streak since July 2002 – last night after concerns about inflationary pressures stoked fears of a rate hike by the Fed. The Dow Jones Industrial Average was 33 points off by the bell.

The futures price of a barrel of US light crude moved slightly below 43 dollars this morning.

On the London market, insurers made further gains after a broker raised its price targets on firms in the sector yesterday. Legal & General was second in the Footsie risers with a near 3% or 3.25p lift to 116.25p while Friends Provident was third with a 4.75p advance to 163.75p. Prudential picked up 11p to 467.75p and Royal & Sun Alliance put on 1.75p to 82.75p.

Shares in book shop chain Ottakar’s fell more than 13% or 45p to 287.5p after the FTSE 350 stock said a lacklustre Christmas season had left annual profits running at below market hopes.

But housebuilder Redrow was near the top of the FTSE 250 risers, up 2% or 7.5p at 381.5p, after predicting that housing market demand would pick up over the next few months.

Shares in construction and engineering group Carillion strengthened 1.25p to 233p after it said second half trading had been good and forecast full year profits in line with hopes.