Life back in FTSE

London shares sparked into life today on the back of positive updates from two market heavyweights and takeover speculation in the logistics sector.

Cable & Wireless and insurer Aviva led the way for most of the session after recent sales beat market expectations, but were then overtaken by logistics group Exel as traders anticipated bid interest from a US rival.

The activity ensured the FTSE 100 Index did not follow US stock exchanges into the red, standing 13 points higher at 4825.5 by lunchtime.

Traders expected the Dow Jones Industrial Average to recover its overnight losses when it opens for trading today, although the cold snap in the north-eastern US and the run-up to elections in Iraq may keep buyers on the sidelines.

In London, Aviva led a rally by insurers after it confirmed a return to sales growth in the UK in 2004 and said it was confident about prospects for the year ahead.

Aviva shares rose 3% or 17p to 637p while Prudential was up 6p at 454p and Friends Provident cheered 2p to 160.5p.

Elsewhere, investors took the latest sales decline at telecoms group Cable & Wireless in their stride. The performance – showing quarter-on-quarter sales down 1% in lower in the final three months of the year – was better than expected and sent shares up by 5.75p to 118.5p.

Speculation that logistics group Exel is a target for US giant United Parcel Services nudged its shares to the top of the risers board, up 6% or 44.5p to 791p.

Investors were cautious about financial stocks on the penultimate day before Northern Rock kicks off the season for annual results by UK banks.

Northern Rock was off 2p at 795p, but a clutch of rivals were faring better with HSBC rising 4p to 872p and Halifax owner HBOS up 10.5p at 850.5p.

Among other moves, mining stocks lost some of their steam following strong gains in recent sessions.

Rio Tinto led the decline, with a drop of 31p to 1659p, while Anglo American slipped 13p to 1239p and Antofagasta eased 11p to 1172p.

Elsewhere, shares in conservatory maker Ultraframe hit an all-time low, down 2.75p to 50.25p, after UK sales in the first quarter of its financial year fell 28% on the same period 12 months ago.

GWR, which owns Classic FM and has a network of local radio stations, faded 3% or 7.75p to 244.25p after it predicted revenues would be 4% lower in January, with market visibility limited.