Dow increase helps push FTSE higher

The London market followed the lead of Wall Street today as investors went in search of cheap looking stocks.

Cable & Wireless and insurer Aviva were the hot picks in London after sales figures beat market expectations, while speculation that Exel was being stalked by a US rival gave its shares added appeal.

Traders also welcomed a 125-point rally for the Dow Jones Industrial Average, pushing the FTSE 100 Index higher throughout the afternoon to close up 30.7 points at 4843.2 and within touching distance of a new two-and-a-half year high.

Spirits were lifted across the Atlantic by a number of positive reports of earnings by US giants, including brokerage firm Merrill Lynch.

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 19p to 639p while Prudential was up 8.5p at 454p ahead of the publication of its new business figures tomorrow and Friends Provident cheered 3p to 161.5p.

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 6.25p to 119p.

Speculation that logistics group Exel is a target for US giant United Parcel Services nudged its shares into second place on the risers board, up 5% or 36p to 782.5p.

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

Northern Rock was up a penny at 798p and a clutch of rivals were also ahead with HSBC rising 9p to 877p and Halifax owner HBOS up 16.5p at 856.5p.

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 30p to 1660p, while Anglo American slipped 7p to 1245p and Antofagasta eased 8p to 1175p.

Elsewhere, shares in conservatory maker Ultraframe hit an all-time low, down 3.5p to 49.5p, 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, rose 2% or 4p to 256p even though it predicted revenues would be 4% lower in January, with market visibility limited.

Buoyant sales over Christmas and New Year helped lift confidence in Home Entertainment Corporation, which owns the Choices chain of video stores, and send its shares 2.5p higher to 180.5p.

The day’s biggest Footsie risers were Cable & Wireless, up 6.25p to 119p, Exel ahead 36p to 782.5p, Lloyds TSB up 14.75p at 486p and Aviva ahead 19p at 639p.

The biggest fallers were Wolseley, down 21p to 1056p, Capita Group off 6.5p to 354.75p, Rio Tinto down 30p at 1660p and Cairn Energy off 20p to 1177p.