FTSE presses for another four year high

The FTSE 100 Index pressed on towards another four-year high today despite an exodus of investors from catering giant Compass.

Compass shares dropped 7% or 15.75p to 217p after its prediction of £710m (€1.04bn) of operating profits was lower than the City was expecting and there was news of another disappointing performance from its UK arm.

But fresh buying of stocks in sectors ranging from telecoms to oil production ensured the Footsie was in robust shape, rising 31.5 points to stand at 5478.8 by mid-morning.

This mirrored the enthusiasm on other major markets where both the Hang Seng index in Hong Kong and Japan’s Nikkei closed in positive territory, while analysts were tipping the Dow Jones Industrial Average in the US to open 30 points to the good.

Among telecoms stocks, shares in O2 hit a new all-time high in the wake of its upbeat trading statement yesterday, which led many brokers to raise their target price.

O2 shares were 3.25p higher at 158.75p, adding another 2% to a similar gain in the previous session. Larger rival Vodafone was up 0.75p at 149.25p on a day when BT rose 0.75p to 224.75p.

Oil giant BP was also at its highest mark for at least five years, up 7.5p at 677p, while Royal Dutch Shell lifted 14p to 1929p.

The retail sector was in focus after second-tier firms HMV, Kesa Electricals and House of Fraser became the latest high street operators to highlight the spending downturn.

Deteriorating conditions caused HMV shares to slide 24p to 214.25p, while House of Fraser dipped 0.5p to 100.5p after underlying half-year losses of £4.4m (€6.5m) and a recent like-for-like sales fall of 6.8%.

Comet owner Kesa escaped a sell-off, despite a sharp fall in half-year profits and a warning of more tough conditions to come. Shares picked up 8.25p to 268p.

As well as the retailers, interest in the FTSE 250 Index was focused on radio company GCAP after it increased the amount it expects to generate in cost savings following the recent merger of Capital Radio and GWR. Shares jumped 16% or 43p to 320p.