London surges back over 5400 barrier

The FTSE 100 Index put aside jitters over Hurricane Rita today to surge back above the 5400 level.

The FTSE 100 Index put aside jitters over Hurricane Rita today to surge back above the 5400 level.

Gains by telecoms and tobacco stocks helped the Footsie shrug aside initial hesitance and move ahead in afternoon trading, ending the final session of the week 27.9 points higher at 5413.6p.

The progress came despite losses by oil heavyweights BP and Royal Dutch Shell after the cost of a barrel of crude fell below 66 US dollars in New York, amid hopes key refineries would escape hurricane damage.

Stocks cast aside downbeat momentum from across the Atlantic, where the Dow Jones Industrial Average stood around 20 points lower by London’s close.

One trader said: “There does seem to be a reluctance to push stocks any higher in the short term, as uncertainty over the likely impact of hurricane Rita this weekend is keeping the market in a cautious mood.”

In London, Imperial Tobacco made the biggest gains after unveiling plans to further restructure its manufacturing operations. Shares cheered 50p to 1597p, while the tobacco sector also saw rival BAT lift 30p to 1217p.

Telecoms stocks also buoyed the mood after a trader said comments by Deutsche Telekom pointed to consolidation in the UK mobile sector.

O2 was behind Imperial on the risers board, adding 4.5p to 155.25p and larger rival Vodafone also attracted new investment – up 2.25p at 149.5p.

A pledge by pubs group Enterprise Inns to return cash to investors helped to lift its shares by 16.5p to 840p.

Enterprise revealed it was considering higher dividends and a share buyback programme, while sentiment was boosted by news that its annual profits were comfortably in line with expectations.

Companies who have been under pressure from rising fuel costs were helped by the fall in the price of oil. British Airways gained 3p to 286.5p, while chemicals firm ICI was ahead by 5.25p at 293.5p.

But the fall left oil companies in the doldrums, with BP losing 6p to 662p and Shell weakening 19p to 1914p.

Today’s heaviest faller was poker giant PartyGaming – off 5.5p at 94.5p. Confidence in online gaming firms has been shaken by PartyGaming’s warning of slowing growth and investors also fear it may make an expensive bid for Empire Online now that rival Sportingbet has walked away from the negotiating table.

Financial services firm Old Mutual was also in the red, retreating 3.25p to 134.5p after Swedish insurer Skandia urged its shareholders to reject a £3.3 billion takeover bid.

Outside the top flight, bank note printer De La Rue advanced 10.75p to 370.75p after the board said first-half underlying results were set to be “modestly ahead” of last year.

The highest Footsie risers today were Imperial Tobacco up 50p to 1597p, O2 rising 4.5p to 155.25p, Capita up 10.75p to 371p and GlaxoSmithKline rising 38p to 1417p.

The heaviest fallers were PartyGaming off 5.5p to 94.5p, Old Mutual down 3.25p to 134.5p, BG Group off 6.5p to 534p and Centrica losing 2.5p to 246.5p.

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