Diageo fails to inspire FTSE investors

Strong gains from publisher Reed Elsevier and drinks giant Diageo failed to encourage the FTSE 100 Index to take further steps from the 6,400 barrier today.

The blue-chip index set a new six-year high last night, but paused for breath by mid-morning with a drop of 10.8 points to 6410.4.

There was still plenty to cheer investors after results from Reed and Diageo contained positive surprises for the market.

Reed’s jump of 6%, or 36p to 640.5p, came after it announced plans to sell its Harcourt education division – a move that will generate a return of cash to shareholders. It was accompanied by a 5% rise in annual profits.

The publisher was followed higher by Diageo after the Guinness-to-Johnnie Walker drinks business posted interim results at the top end of market expectations. With analysts revising expectations for the full year, shares were up 27p at 1048p.

BAE Systems joined the risers board, up 11p at 453.75p after Credit Suisse and Merrill Lynch raised their price targets on the stock ahead of the company’s full year results next week.

The biggest faller was Plumb Center chain Wolseley, which lost some of the 7% rise seen yesterday after a report of private equity takeover interest. Shares were off 3%, or 36p at 1371p.

The second tier saw a gain of 4% for car dealership Pendragon as company results benefited from last year’s acquisition of Reg Vardy. Profits were up 51%, while Pendragon added it was optimistic about prospects for the used car market. Shares were ahead 3.75p at 103.5p.

UK Coal topped the FTSE 250 Index risers board with a second decent increase for its shares in as many days. The stock was up 31.5p at 474p, amid speculation that it could get planning permission to build 900 homes in West Yorkshire.