FTSE on the rise

The FTSE 100 Index headed back towards the 5400 mark today as oil and drugs stocks countered losses elsewhere on the market.

Buyers were absent for most of the session but took control in the afternoon as the Footsie closed 16 points higher at 5385.7.

Oil heavyweights BP and Royal Dutch Shell benefited from the price of a barrel of crude rising as Hurricane Rita bore down on the Gulf coast of the United States.

Uncertainty over whether Rita will hit refineries in Texas pushed the cost of a barrel of oil towards 68 US dollars in trading in New York.

Stocks across the Atlantic continued their recent run in negative territory, but losses of 10 points after opening were not as bad as the triple-digit deficit which opened up in the previous session.

In London, BP rose 5p to 668p and Shell was ahead by 19p at 1933p as investors saw opportunities for the firms to reap more rewards of a buoyant oil market.

However, the pressure told on oil-dependent stocks such as British Airways and chemicals giant ICI, which lost 5.25p and 5p to 283.5p and 288.25p respectively.

Engineering firm Smiths was the biggest faller despite an upbeat set of annual results. Shares dropped 17p to 935p even though it said its four divisions of aerospace, detection, medical and speciality engineering all contributed higher earnings.

Broadcaster ITV was another faller, off 0.25p to 110.75p. ITV said yesterday that the head of its broadcasting division would step down as part of a management reshuffle.

In contrast, pharmaceutical stocks boosted sentiment with AstraZeneca rising 35p to 2597p, GlaxoSmithKline ticking 11p higher to 1379p and Shire ahead by 7.5p at 679p.

Today’s corporate news put smaller stocks in focus. Clothing and home furnishings retailer Laura Ashley lifted 2% or 0.25p to 13.25p after saying a cost-cutting drive had helped shape up the business.

The takeover offer from HMV shielded bookseller Ottakar’s from any backlash from investors after it said like-for-like sales in the seven weeks since the start of August fell 3.8%.

HMV has offered 440p for each share of Ottakar’s and this was where the shares were pegged today.

Investors backed out of Amstrad – headed by Sir Alan Sugar – after the electronics firm took a £5.7m (€8.4m) hit following poor sales of its videophone and warned that profits in the new financial year could stall. Amstrad shares fell 9% or 12.75p to 134.25p.

But there was interest in shares of firms that might benefit from further hurricane damage in the US, with temporary power specialist Aggreko rising 2.75p to 231.75p in the FTSE 250 Index.

The highest Footsie risers today were Old Mutual up 3.75p to 137.75p, Scottish & Newcastle adding 9p to 464.75p, Cairn Energy up 33p to 2018p and Whitbread adding 14.5p to 952p.

The heaviest fallers were PartyGaming down 5.25p to 100p, Amvescap off 9.5p to 352.75p, Xstrata losing 30p to 1398p and Reuters down 7.25p to 366.5p.