Top flight shares ended the week on a new two-and-a-half-year high today after investors kept faith in Marks & Spencer.
The FTSE 100 Index rose above its June 2002 level of 4851.7 to stand 29.8 points ahead at 4854.1 by the close.
Marks shocked the market by warning that it was unlikely to muster more than £625m (€895.5m) in profits this year after it was forced to slash prices to shift surplus stock.
But after dipping initially, shares in the group recovered to stand nearly 3% or 9.25p ahead at 348p by the close as analysts expressed relief that the news was not worse.
David Buik of Cantor Index said: “There seemed plenty of evidence that the key fund managers will support (M&S chief executive) Stuart Rose through thick and thin for at least a year.”
Slightly worse than expected US non-farm payroll data helped to limit progress by the Dow Jones Industrial Average, which was hovering around its opening mark shortly after London’s close.
But economic news in London contributed to the Footsie’s rise, with housing market figures providing further signs that the Bank of England would shy away from hiking interest rates next week.
Figures from the Halifax showed the average cost of a home increased by 1.1% in December, although the mortgage bank said the overall picture remained one of a cooling market.
Oil stocks moved higher on the back of a rise in the price of US light crude to just under $46 a barrel.
Shell and Cairn Energy both benefited, rising 1.25p to 446.25p and by 28p to 1070p respectively.
BP, however, was unchanged at 509p, but a broker upgrade lifted gas group BG by 9p to 357.5p.
Retailers were holding up well despite profits warnings from M&S and JJB Sports, plus a gloomy trading update from Iceland owner Big Food.
Marks & Spencer was the Footsie’s highest riser in the sector, but Dixons - which is due to post interim results on Wednesday – was close behind with a gain of 2.75p to 153.5p.
JJB Sports also lowered profits expectations, but the sales decline of 1.4% was also not as bad as many had feared. The company knocked back a bid approach in October, but analysts believe the weaker trading performance made it more vulnerable to a renewed bid. Shares initially fell 2% but later stood more than 6% higher, up 11.5p at 201.5p.
Among other FTSE 250 Index companies, recruitment specialist Michael Page rose almost 5% after the company said fourth quarter trading had remained strong in the UK, Asia Pacific and the Americas. Conditions have also improved in Europe and led the shares to surge 8p to 183.5p.
Biggest risers included ICI ahead 11.25p to 242.25p, Shire Pharmaceuticals up 27p at 597p, HBOS lifting 30.5p to 876.5p and ITV advancing 3.25p to 106.75p.
Largest losers were Xstrata, down 19p at 879.5p, William Hill off 10p at 545.5p, Severn Trent losing 11.5p to 956p and BHP Billiton retreating 7p to 589.5p.