Footsie back in the black

A strong start on Wall Street helped drive the London market into the black today after an indecisive day for blue chip names.

With New York’s Dow Jones Industrial Average powering ahead this afternoon, up more than 100 points by the close of London trading, the FTSE 100 Index managed to end the day above break-even, up 6.8 points to close at 5665.

Although modest, the gain marked a steady turnaround for the top flight index which drifted more than 47 points below its opening mark at one stage.

Earlier minutes from the Bank of England’s Monetary Policy Committee reduced fears of a rise in the cost of borrowing in the short-term but appeared to be met with indifference by investors.

Stock markets around the world have been rocked in recent weeks by the threat of higher inflation and subsequent rises in interest rates, but today’s more reassuring update from the Bank of England did little to help shares in London.

Instead corporate news from HBOS, Sainsbury’s and Currys owner DSG International was among the factors weighing on traders’ minds during the mid-session fall.

DSG headed the blue chip fallers board – down 8.5p to 184.75p – as confirmation that it planned to offload its struggling The Link chain failed to divert attention away from falling profits.

It was followed down by Halifax and Bank of Scotland owner HBOS, which lost 14.5p to 938.5p after a trading statement was not as bullish as investors had hoped.

HBOS said it was “comfortable” with analysts’ forecasts that underlying profits for 2006 would rise to £5.2 billion from £4.8 billion a year earlier.

Elsewhere in the banking sector it was a mixed picture with Royal Bank of Scotland gaining 7p at 1745p and Alliance & Leicester putting on 8p to 1133p, but Lloyds TSB shares fell 1.5p to 523.5p and HSBC eased 2.5p at 935p.

Sainsbury’s shares were also down 2p to 321p after an upbeat trading statement showed like-for-like sales excluding petrol leapt 5.7% in the first quarter of the year but failed to update on profits margins.

Rival supermarket Morrisons was off 3.25p to 194.75p and Marks & Spencer fell 3.5p to 566.5p but Tesco was up 1.5p at 329.5p.

Associated British Food gained 15p to 731.5p as investors cheered its announcement yesterday that it will collaborate with oil and gas group BP and chemicals firm DuPont to produce the next generation of bio-fuels in the UK. Production is expected to start in September 2007.

Also on the rise was ITV, which ticked 2.75p higher to 105.25p following a trading update which was in line with expectations in the City.

ITV said it expected total advertising revenues to slide 4.6% to £750 million in the first half of the year but announced it would increase its return of cash to shareholders this year, from £300 million to £500 million.

The biggest FTSE 100 risers were Partygaming up 3.75p to 119.25p, Kazakhmys up 33p at 1095p, Compass gaining 7.5p to 250p and Lonmin adding 7.4p to 2641p.

The biggest fallers were DSG International off 8.5p at 184.75p, Morrisons 3.25p lower at 194.75p, Rolls-Royce losing 6.5p to 398p and Land Securities down 28p to 1744p.