FTSE up as inflation fears decrease

Share prices in London made welcome headway today as a sunnier outlook emerged on both sides of the Atlantic.

With fresh US economic data trimming some of the fears of inflation in the world’s largest economy, jitters were at the back of traders’ minds.

The Dow Jones Industrial Average was 70.2 points higher at 11867.5 as trading on this side of the Atlantic closed for the day and London’s FTSE 100 Index finished up 90.6 points at 5677.7.

The improved position, which almost recouped yesterday’s fall of 91.6 points, came despite signs that two of the market’s longest-running takeover episodes were coming off the boil.

BAA shares fell 6% after a potential takeover by Ferrovial was complicated by the surprise news of a possible regulatory inquiry into the airports sector.

The company also posted a robust defence document against Ferrovial and said it was worth at least 940p a share – much more than the 810p a share currently on the table. With a deal looking less likely, BAA led the fallers slipping 46.5p to 787.5p.

In the FTSE 250 Index, which made robust gains of 136.5 points overall, shareholders took the view that US exchange Nasdaq now faced a clear run for the LSE.

LSE shares were off 9%, or 110p to 1079p, even though it posted “outstanding” full-year results with operating profits up 42% to £120.1m (€175.9m).

The biggest gain in the Footsie was for sugar giant Tate & Lyle which climbed 6% or 30p to close at 564p on results showing steady growth in underlying profits.

Analysts said that a £272m (€398.4m) impairment charge which dragged down the group’s bottom line figure was lower than expected.

Miners were also in recovery mode with Kazakhmys up 55.5p to reach 1076p, Rio Tinto 89p higher at 2924p and Anglo American up 58p at 2074p.

Other positive movers in the top flight included supermarket group Morrisons after veteran chairman Sir Ken Morrison reduced uncertainty over the company’s future leadership by outlining plans to stand down in January 2008.

The company also revealed a 6% increase in like-for-like sales in the 16 weeks to May 21, helping to lift shares by 5p to 194.75p.

As well as BAA, Cable & Wireless lost ground as the telecoms group said it was discontinuing a share buy-back in order to bolster its financial firepower. With annual results slightly weaker than hoped, shares eased 2%, or 2.5p, to 97.5p.

Outside the top flight, shares in former Marconi company Telent jumped almost 10%, or 44.5p to 512p, as it revealed it had accepted a takeover approach from a US-based investment company.

The biggest FTSE 100 risers were Tate & Lyle up 30p to close at 564p, Kazakhmys gaining 55.5p to reach 1076p, BG Group 32.5p higher at 699.5p and Corus rising 15.25p to end the session at 373p.

The biggest Footsie fallers were BAA down 46.5p at 787.5p, Cable & Wireless 2.5p lower at 97.5p, SABMiller off 15p at 984p and DSG International losing 1p to close at 196.5p.