FTSE reaches two-month high

Strong gains for oil and banking stocks saw the FTSE 100 Index make good progress today and close at another two-month high.

Strong gains for oil and banking stocks saw the FTSE 100 Index make good progress today and close at another two-month high.

The recovery by financial firms, amid hopes the worst of the credit crunch may be over, saw HBOS rise 10.25p to 315.75p, Royal Bank of Scotland improve by 4.75p to 234.75p and Barclays lift 3.5p to 353p.

Oil remained in sight of the US$120 a barrel mark, seeing the likes of BP on firmer ground and helping the Footsie close up 35.4 points at 5636.6.

The session shrugged off a weak start on Wall Street as investors reacted to slower consumer spending data.

Amid the solid oil prices, Petrofac was the Footsie’s best performer, up 5% or 31.5p to 652.5p. Oil and gas services firm Wood Group also added 21.5p to 476.75p.

Sainsbury’s enjoyed some strong gains after market rumours of a 500p a share takeover approach, but the rise gradually eased to leave the shares up 3.75p at 347.75p.

RSA Insurance meanwhile lost hold of gains seen yesterday amid speculation of a bid from Zurich Financial Services. The stock slipped 2% or 3.3p to 150.8p, while among life insurers Prudential was 6.5p lower at 548p and Legal & General fell 1.3p to 100.5p.

Vodafone was one of the market’s biggest fallers, down 1% or 1.8p to 141.05p amid fears about slower consumer demand and a pricing crackdown by the European Commission.

The main corporate action involved stocks outside the top flight, with Bradford & Bingley and the Restaurant Group – owner of the Frankie & Benny’s chain - among those reporting results.

As expected, B&B interims were grim with bottom-line losses of £26.7m (€33.1m) and widening arrears. While analysts said there were no surprises in the results, shares were still down 1.25p at 49p.

Restaurant Group impressed investors after a 20% rise in first-half profits and a steady start to the second half of the year. Shares rose nearly 6% or 7p to 139p.

But Sunlight linen hire business Davis Service Group slid 16% after it scaled back expectations for this year and next. The group said lower hotel occupancy rates were impacting on its Sunlight business in the UK. Shares fell to 341p, down 64.5p.

Paving products firm Marshalls suffered a similar fate, falling nearly 5% after it said first half profits fell 17% and it reported lower sales during July and August. Shares were off 8.5p to 167p.

And Hovis and Branston pickle firm Premier Foods lost another 6%, or 5.25p to 86.75p, after interim results yesterday failed to ease concerns about its £1.8bn (€2.2bn) debt position.

The Footsie’s four biggest risers were Petrofac, up 31.5p to 652.5p, Wood Group up 21.5p to 476.75p, Cairn Energy up 121p to 2978p and London Stock Exchange which closed up 31p at 793p.

The four biggest fallers were Enterprise Inns, down 11.25p at 303.5p, Drax Group down 16.5p to 746.5p, RSA Insurance down 3.3p to 150.8p and National Grid down 14.5p to 714.5p.

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