Footsie back in the black

The London market bounced back from six straight falls today as strong corporate results and merger and acquisition activity tempted investors back to the table.

The FTSE 100 Index lifted 58.5 points to 6084.4 – a rise of 1% – having lost nearly 200 points since last week on the back of the falling dollar.

It came as the Dow Jones Industrial Average continued its mini-rally with a gain of nearly 90 points by the close of trading in London.

Software group Sage set the pace with a rise of more than 7% after its full-year results came in slightly ahead of market expectations. Shares were up 18p to 259p.

It was followed up by catering giant Compass after news suggested the business was turning the corner following a spate of profits warnings.

The company, which has suffered weaker margins on UK school meal contracts and poor summer trading in Europe, reported a 6% increase in pre-tax profits to £363 million during the year to September 30. Shares were up 19p at 290p.

Build Center chain Wolseley was also among the other front runners – up 45p to 1180p – even though the company warned first half trading would be impacted by the current slowdown in the US housing market.

And Bradford & Bingley gained nearly 3% or 12.25p to 459.25p amid speculation that HSBC might be interested because of its exposure to the buy-to-let market.

HSBC was up 3.5p to 949p while elsewhere in the banking sector, Barclays lifted 10.5p to 687p and Royal Bank of Scotland rose 12p to 1857p.

The positive sentiment spread across the financial sector to insurers with Legal & General up 4p to 153.5p and Prudential 15.5p higher at 662p.

And pharmaceuticals were also on the rise on the hope of cost cuts following Pfizer’s decision to cut 20% of its US sales force.

Analysts said the rest of the industry could follow the world number one, which would boost profitability across the sector. The news sent shares in Shire up 34.5p to 1041p while GlaxoSmithKline lifted 40p to 1371p and AstraZeneca was 77p higher at 3008p.

Steel maker and bid target Corus was up 2p to 500p as strong results added to continued takeover talk involving Brazilian CSN and Indian rival Tata.

Elsewhere, Umbro shares were more than 11% lower after the sports kit firm warned tough trading conditions in the UK would cause full-year results to be slightly below hopes. Shares were down 16.5p at 127.5p.

And magazine publisher Future saw its share price reach 33.5p – up by 10% or 3p – after outlining plans for a recovery in the face of losses of £49 million, which were caused by poor advertising revenues and a weak acquisition strategy.

The day’s biggest blue chip risers were Sage up 18p to 259p, Compass 19p higher at 290p, Wolseley up 45p to 1180p and ICI 14p better off at 422.75p.

The heaviest fallers were Carnival down 52p to 2511p, Next off 22p to 1773p, Associated British Foods 9p weaker at 859p and Kingfisher off 2.5p to 248.25p.