FTSE rallies at suggestion of US rate cuts

The London market moved well into positive territory today as trading gained momentum amid hopes of more interest rate cuts in the US.

Investors in London fed off a strong start to the day following a near 1% rise in the Dow Jones Industrial Average, powering up the FTSE 100 Index by 70.5 points to 5964.3 at mid morning.

Sentiment in the US was buoyed after the Federal Reserve fuelled cheaper borrowing hopes with a warning of lower growth stateside.

In London, publisher Reed Elsevier topped the Footsie’s leader board after the group revealed a major US acquisition and annual results in line with market expectations. Shares jumped 32.5p to 616.5p, a gain of more than 5%.

Mining firms followed Reed on the risers board, including a gain of 69p to 2287p for metals producer Vedanta Resources. Lonmin and Xstrata were also up, adding 140p to 3604p and 253p to 4200p respectively.

And B&Q owner Kingfisher rose 3% after investors expressed relief that full-year results were likely to be in line with expectations. The gains faded as the session wore on, to leave Kingfisher 3.3p higher at 135.3p.

Banks were also better off in the positive mood today. Halifax Bank of Scotland added 14p to 660.5p and Royal Bank of Scotland was up 9.75p to 373p. Lloyds TSB shares also cheered, rising 9p to 437p.

But Alliance & Leicester shares remained under pressure after annual results yesterday raised fears about the company’s performance in 2008. Shares were off another 4%, or 22p to 470p.

Scottish & Newcastle shares were down more than 2% after SABMiller quashed rumours that it was planning a counter-bid for the UK brewer. Shares in S&N rose on the speculation yesterday, but were down 21p to 786.5p today.

British Gas owner Centrica also lost 5.75p to 321p, despite a 40% leap in group-wide earnings, to £1.95 billion last year.