Footsie up as oil prices drop

London shares closed near to their highest level this year today as investors welcomed falling oil prices and the conclusion of the election in Iraq.

The FTSE 100 Index lost hold of an earlier 46 point gain, but stabilised to end the session 19.5 points ahead at 4852.3 – just below the two-and-a-half year high seen earlier this month.

The relatively successful end to the Iraqi polls eased political pressure on the US, pushing the price of US light crude down 53 cents to 46.65 US dollars a barrel in futures trading shortly after London’s close.

The Dow Jones Industrial Average reflected investors’ relief about the outcome of the elections, lifting 56 points in afternoon trading.

The Dow also got a boost from takeover talk sparked by Metlife’s acquisition of Citigroup’s life insurance unit.

Back in the UK, there was downbeat economic news in the form of new research pointing to the quietest January for retailers in six years. The CBI study found 33% of firms believed their sales volumes were down on a year earlier, compared with the 30% who thought they were up. The resulting balance of minus three was the weakest January performance since 1999.

However, possible takeover activity and a strong trading update from Dublin-based budget carrier Ryanair was lifting spirits.

Better-than-expected third quarter figures from Ryanair helped lift British Airways to third in the list of Footsie risers.

BA gained more than 2% or 5.75p to 265.75p while FTSE 250 Index stock easyJet also put on more than 2%, up 4.75p to 220p. With its own full-year forecasts being raised, Ryanair shares lifted by 7.5%, or 0.44 euros to 6.31 euros.

But oil shares took a hit from the lower price of crude, with BP down 2p at 523p and Cairn Energy topping the Footsie fallers, off 26p at 1112p. Investors in Shell, however, took heart at reports that it is likely this week to report the largest profit in UK corporate history, boosting its shares by 2.25p to 463.5p.

In the second tier, high street retailer Woolworths was up 6% early on, but then shot ahead by more than 22% – or 9p to 49.5p – after private equity group Apax confirmed weekend reports that it was considering making a bid. Meanwhile, a tie-up with Chinese company Huawei helped telecoms group Marconi shares to lift nearly 6% or 35p to 630p.

Manchester United was among other stocks on the FTSE 250 risers board, lifting 12p to 266p following a weekend of speculation over the possibility of further bid interest from US sports tycoon Malcolm Glazer.

Elsewhere, support services group Jarvis surged more than 17% or 4.9p to 32.65p, following the extension of banking facilities until March 2006. That was after the company said it had successfully secured the future funding of 14 outstanding construction contracts.

The day’s biggest winners included Amvescap, up 19.25p to 348p, Standard Chartered lifting 28p to 975p, British Airways gaining 5.75p to 265.75p and United Utilities adding 13.5p to 640.5p.

Biggest losers were Cairn Energy, down 26p to 1112p, Land Securities off 29p at 1377p, British Land weakening 12.5p to 861p and Next easing 21p to 1571p.