FTSE near break-even mark

The FTSE 100 Index hovered around the break-even point today despite a rally by a number of blue-chip stocks following a torrid two days trading.

After a more positive night on Wall Street with the Dow Jones Industrial Average closing 47.9 points higher, the London market got off to a slow start.

As investors mulled over official figures which show higher air fares and soaring energy bills sent inflation back up to the Bank of England’s target rate of 2% last month, the Footsie stood 4.4 points lower at 5837.1 by mid-morning.

Fears over inflation and the impact of a weak US dollar have seen markets worldwide badly affected over the previous two sessions with the Footsie suffering its heaviest percentage decline for two years on Friday.

Alliance UniChem and Boots led a charge forward today as investors became excited about their planned merger.

Deutsche Bank upgraded Boots to “buy” from “hold” and said the tie-up made both strategic and financial sense. Alliance lifted 3% up 30.5p to 939p while Boots rose 2% up 16.5p to 739p.

Shares in catering giant Compass also rose 2% or 4.5p to 239p despite reporting a 9% slump in pre-tax profits for the first half after finance director Andrew Martin signalled progress was being made in creating a solid platform for future growth.

On the down slide, hotel group InterContinental saw its shares drop 3% or 28.5p to 939.5p despite posting a near 8% rise in pre-tax profits to £70 million for the first quarter.

Mining stocks continued to tumble with Antofagasta off 3% or 64p to 2209p, Kazakhmys down 48p to 1156p and Anglo American down 64p to 2218p.

Oil stocks also were also out of favour as Brent crude slumped to around 68.85 dollars a barrel, hit by the slide in the dollar. BP was down 2.5p to 643.5p, Cairn eased 50p at 2220p while BG was flat at 694p.