London bounces back after fortnight of falls

Insurers and oil stocks ensured the London market regained its feelgood factor today and buried the memories of two straight weeks of losses.

Aviva, Legal & General and Friends Provident all advanced after financial services group Old Mutual resolved to tackle issues in the way of a potential takeover of life insurer Skandia.

The sector was also lifted by investors taking the view that UK insurers had limited exposure to claims in the US after Hurricane Katrina blazed a trail of destruction across southern states.

And with buoyant oil prices propping up the share prices of BP and Royal Dutch Shell, the FTSE 100 Index ended the session 27.7 points higher at 5255.8.

A barrel of crude oil climbed above $69 today, but failed to repeat the performance of yesterday when it breached the $70 threshold before slipping back.

Figures from the Bank of England showing that credit card borrowing rose at its slowest pace for more than four years were also at the forefront of thoughts in the City.

Although the data did little to suggest a recovery in economic confidence, they raised hopes again that interest rates could be lowered in the coming months.

Insurers attracted interest in the wake of the statement from Old Mutual about its talks over a potential bid for Skandia.

Aviva rose 7p to 611.5p, Legal & General ticked up a penny to 110.5p and Friends Provident gained 0.75p to 172.25p to follow the example of Old Mutual - up 2.5p at 138.5p.

Oil major BP benefited from the high price of crude and the fact that Hurricane Katrina had not wreaked as much havoc as previous storms, rising 12p to 622p.

Gains by Royal Dutch Shell were more muted at 18p to 1842p after one of its platforms in the Gulf of Mexico appeared to be damaged and personnel had to be evacuated from it.

The highest Footsie risers today were Rentokil Initial lifting 4.25p to 162.75p, Hilton up 7.25p to 317.25p, AstraZeneca rising 52p to 2531p and BG Group up 10p to 492p.

The heaviest fallers were Wolseley off 29p to 1110p, ITV down 3p to 116p, WPP Group off 9p to 571p and Kingfisher down 3.75p to 251.75p.