Lacklustre morning for FTSE

The London market was stuck in first gear today as data showed the number of jobless in the UK rose for the seventh month in a row in August.

The London market was stuck in first gear today as data showed the number of jobless in the UK rose for the seventh month in a row in August.

Following the anaemic performance by other major markets around the world overnight, the FTSE 100 Index enjoyed muted gains – up 5.4 points to 5343.4 by mid-morning.

Analysts said the UK claimant count was less than the market was expecting and the odds on an interest rate cut before the end of this year lengthened when the data was combined with a pick-up in pay and the rise in monthly inflation to 2.4%.

In London, building materials group Wolseley added 14p to 1164p as investors continued to take the view that it will benefit from higher demand in the US, particularly following Hurricane Katrina last month.

Underscoring the caution of investors was their interest in tobacco companies, which are seen as less volatile than many other blue-chip stocks.

BAT was the fastest riser on the Footsie today with a 17p gain to 1172p and was closely followed by Imperial Tobacco, up 13p at 1533p.

But there was little joy for drinks manufacturers with Diageo and Scottish & Newcastle topping the fallers board – down 19.5p and 7.5p at 809.5p and 472p respectively.

Their falls were prompted by investors losing the right to the latest dividend payments – an technical issue that also affected banking giant HBOS, which weakened 9.5p to 850.5p.

Elsewhere, money lender Provident Financial climbed 18.5p to 657p as it promised a review of its Yes Car Credit business, which could include it being put up for sale.

Caffe Nero added 5p at 215p to put it on course to close at an all-time high after saying that its strong growth continued over summer despite the jolt to sales from the bomb blasts in London.

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