The London market ended today back above the 5000 level after investors took heart from news about US interest rates.
After dipping more than 19 points into the red earlier in the day, the FTSE 100 Index rallied to stand 5.5 points ahead at 5009.2 by the close of trading.
The Dow Jones Industrial Average also rose modestly after London’s close as traders looked on the bright side of comments made to a congressional committee by Federal Reserve chairman Alan Greenspan.
Mr Greenspan said the US economy is on a “firm footing” and base rates may keep rising at a measured pace.
Although there had been hopes that the recent run of US interest rate hikes had ended, stocks rose as investors expressed relief that the news was not worse, analysts said.
There was also relief in London about interest rates after the Bank of England kept the cost of borrowing at 4.75% for the tenth month in a row.
In London, steel group Corus was second in the list of top-flight fallers as investors reflected on the news of its demotion from the top flight to the FTSE 250 Index. Shares were almost 3% or 1.25p down at 41.75p.
Morrisons continued its downward spiral following yesterday’s profits warning, standing top of the fallers with a 5.5p retreat to 177.5p.
Insurers were adding to the negative performance, with Norwich Union owner Aviva down 2p at 612.5p and Legal & General down 0.75p to 109p.
Utilities group Severn Trent was one of the few stocks to make significant headway, rising 14.5p to 1023.5p as investors turned to the company in the wake of its full-year results earlier this week.
Halfords was high among the FTSE 250 risers after the car accessories and bikes retailer reported continuing sales growth. Shares rose 8.5p to 296p.
While Arla Foods occupied top spot in the second tier risers, the second place belonged to easyJet as shares in the low-cost airline lifted 4% or 10.75p to 245.5p, helped in part by positive passenger numbers released yesterday.
Third in the list was FKI, the engineering group that unveiled a 5.4% rise in profits and forecast further growth this year. Shares were 4p higher at 101.75p.
A clutch of housebuilders moved in the opposite direction as concerns grew about the state of the market. Fallers included McCarthy & Stone, down 15p at 550p, and Persimmon off 16p at 745p.
Elsewhere, bars operator Urbium lifted nearly 11% or 72.5p to 772.5p as investors welcomed its decision yesterday to reject an approach by Regent Inns.
Alba fell more than 15% or 68.5p to 385p as it reported a 32% fall in annual profits – driven by retailers reducing the prices of its consumer electronics goods.
Biggest risers were Royal & Sun Alliance up 2.25p to 81.25p, BAT ahead 22p to 1100.5p, Alliance Unichem lifting 14.5p to 849.5p and Shire Pharmaceuticals gaining 9.5p to 597p.
Biggest fallers were Morrison’s down 5.5p to 177.5p, Corus losing 1.25p to 41.75p, Rentokil Initial weakening 2.5p to 151p and Compass Group retreating 3.5p to 219p.