M&S set the pace for FTSE

Marks & Spencer set the pace for blue-chip stocks after a broker raised its price target on the rejuvenated retailer today.

In a session when the FTSE 100 Index improved 34.7 points to 5654 by lunchtime, Marks was top of the pile with a rise of almost 5%, or 26.5p to 581p.

Deutsche Bank created the excitement after it put a 655p price target on the stock and said recent falls for the stock may represent a buying opportunity.

It said it saw a £1.2bn (€1.75bn) sales opportunity from turning around under-performing product categories or addressing new opportunities.

Another recovering retailer also made strong progress during the session, with Morrisons up 7.25p to 201.75p.

The rest of the market was in positive mood as the nerves of investors showed signs of steadying after several weeks of inflation worries.

The Dow Jones Industrial Average led the charge with a rise of almost 200 points last night, while Asian markets followed suit. The Footsie had been as much as 82 points higher earlier in the session as the top flight built on gains of more than 100 points last night.

Soothing comments on inflation by Federal Reserve chairman Ben Bernanke helped cool interest rate fears, pushing the miners forward with Kazakhmys up 24p to 1032p and Antofagasta ahead 16p at 1942p.

On a quiet day for corporate news, Centrica allayed fears that recent trading difficulties at its British Gas arm had worsened when it posted a brief statement confirming business had been in line with previous guidance. Shares rose 1% or 2.75p to 274.75p as the company also said it would invest £400m (€585m) in the UK’s first new power station in almost five years.

It was beaten to the top by electricity firm Scottish Power up 3%, or 19p to 575p.

Second flight oil exploration company Tullow saw its shares gain 5% or 15p to 335.75p following a potentially “significant” new gas discovery in the North Sea.

Tullow said it had encountered reservoir quality gas bearing sands at its K4 well, which it is exploring in a joint venture with the UK arms of US energy company ConocoPhillips and Gaz de France.

However, shares in project management company AMEC fell 5% or 17p to 328.5p after it warned half-year results would be at the bottom end of hopes after further tough trading in its UK construction arm.

While its investment business and oil and gas divisions showed continued strength, the company said trading remained poor in UK construction, resulting in a first half “weaker than previously anticipated”.