Calming terror threat helps FTSE

The London market received a much needed boost today after a ceasefire in Lebanon and a downgrade of the terrorist threat in the UK.

The FTSE 100 Index gained 34.9 points to 5855 by lunchtime with British Airways and banks among those on the move.

Shares in airlines fell last week after an alleged plot to blow up planes in mid-flight was thwarted by the police in a series of raids across the UK.

But BA gained 1% or 3p to 373p today after the UK security threat level was lowered from critical to severe.

BA also benefited from a fall in oil prices as a ceasefire in Lebanon took hold, although easyJet was 4p lower at 413p. The cost of crude has soared in recent weeks amid fears supply could be hit by an escalation in tensions in the Middle East, but it fell by more than a dollar a barrel today.

The price fall was helped by news that BP will not shut its Prudhoe Bay oil field in Alaska despite the discovery of a leak. Shares in BP lifted 9p to 620p today, while Royal Dutch Shell was up 12p to 1934p.

Among the banks on the front foot were Royal Bank of Scotland – up 20p to 1751p – and Barclays – up 6.5p to 642p.

And pubs firm Enterprise Inns lifted 10.5p to 992p after selling 769 pubs to Admiral Taverns for £318m (€471m). Enterprise said the transaction was part of a plan to improve the quality of its estate by offloading pubs that did not meet its objectives.

Going in the other direction, steel group Corus tumbled 9p to 379.25p after analysts noted it is coming under pressure from high energy costs and its high exposure to the spot market for steel prices.

And in the second flight, building and maintenance firm Interserve plunged 25% - down 88p to 268p – after it said a mis-statement of its accounts would reduce its net assets by £25m (€37m) on a post-tax basis.

Six senior members of staff have been suspended after the accounting irregularities emerged and an independent review is being carried out.

Interserve was followed down by recruitment firm Michael Page which fell 20.75p or 6% to 305p despite reporting positive results.

The London-based company said turnover from operations worldwide rose by 24.6% to £312m (€462.5m), while operating profits were up 47.4% to £45.1m (66.86m) in the six months to the end of June but analysts were concerned profits would drop as investment stepped up.