Footsie hits three-year high

The London market held its nerve today to secure its best finish since the summer of 2002.

The London market held its nerve today to secure its best finish since the summer of 2002.

Profit takers moved in when the FTSE 100 Index looked set to breach the 5100 barrier for the first time in three years, but it failed to take the shine off a positive session overall.

With investors clamouring for oil and utility stocks and Wall Street opening in the black, the Footsie was able to close 32.6 points higher at 5077.6.

Paul Webb, a trader at deal4free.com, said the rally was significant as the City was now focused on the psychologically important 5100 mark.

He added: “Next week’s Bank of England meeting minutes will be closely followed to see if there is any groundswell of opinion to start softening the UK’s approach to monetary policy.”

The sight of the cost of crude climbing above 57 US dollars a barrel on fears of summer shortages was enough to spark a fresh round of investment in market heavyweights BP and Shell.

Oil prices are now within a whisker of the record of 58.28 US dollars and with gas prices also higher, investors were excited about the prospect of utilities firms raising bills to maintain their revenues growth.

Shell was among the biggest top flight climbers, up 2% or 10.5p to 516.5p, and was closely followed by BP which rose 9p to 586.5p.

Among utility firms, International Power was attracting much of the investment and gained 4p to 197.25p while National Grid Transco cheered 8p to 526.5p.

However, drinks giant Allied Domecq and insurer Royal & Sun Alliance both ended on the back foot as investors reacted with disappointment to updates on bid approaches.

Allied lost nearly 2% of its value after US-based Constellation Brands said it would not be pursuing an offer, leaving the path clear for Pernod Ricard. Shares dropped 12p to 680p after Constellation said a deal would not create “sufficient value”.

However, the news lifted rival drinks firm Diageo, which moved up 2p to 807p.

R&SA was languishing in the red after the investment vehicle of financier Andrew Regan – best known for his attempt to buy the Co-op – abandoned its pursuit of the company. Shares in R&SA weakened 0.5p to 83p.

Outside the top flight, entertainment group Sanctuary lost a third of its value today after it blamed delays to record releases for a probable 40% fall in earnings. The stock plunged 13.25p to 29.75p.

But cosmetics specialist Body Shop rose more than 4% or 10p to 249p after revealing UK like-for-like sales had continued to buck the wider high street trend, up 7% in its first quarter.

The biggest risers were Land Securities Group up 35p to 1471p, Compass Group ahead 5.25p at 226.25p, Wolseley gaining 24p to 1162p and Shell lifting 10.5p to 516.5p.

The biggest fallers included Corus Group down 1p to 43.5p, Allied Domecq drifting 12p to 680p, Gallaher off 13.5p to 835.5p and Bunzl falling 7.5p to 510.5p.

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