Interest rate cut hopes and a smaller-than-expected contraction in the US economy helped the London market consolidate recent gains today.
The FTSE 100 Index closed up 49.1 points at 4291.7 having surged around 400 points in the previous two sessions.
The top flight soared by as much as 2.4% at one stage today after news of a 0.3% US GDP decline for the third quarter. This represented the first negative figure for the world’s largest economy since the early 1990s, but it was also better than most forecasts.
Hopes of lower interest rates also encouraged investors after the Federal Reserve cut rates from 1.5% to 1% on Wednesday night. Blue chips later pared back some of the gains as investors looked to lock in profits.
Miners dominated the FTSE risers board, with Kazakhmys ahead 12% or 32.75p to 301.25p, Vedanta Resources up by 105.5p to 775.5p and Antofagasta ahead 29.75p to 367.25p.
A busy day for corporate updates drew a mixed response in the City, with AstraZeneca and Rolls-Royce both higher but Royal Dutch Shell slipping amid the wider profit taking.
Shell posted bumper third-quarter profits of £6.6 billion, but shares dropped 81p to 1589p, as investors weighed up falling production output and took profits after strong gains for the oil sector yesterday.
Life and pensions firm Standard Life was also under pressure for a time as it reported flat sales and noted a difficult outlook. But reassuring comments on its capital strength shone through and Standard later stood 13p higher at 213p.
Other insurers were buoyed by the overall message from Standard, with Friends Provident ahead 6.7p at 66.7p and Norwich Union firm Aviva 26p stronger at 350p.
There was a positive reaction to Rolls-Royce’s trading update, which lifted 9% or 26.24p to 314.25p after it reported £5 billion of new orders since June 30 and said current trading was in line with expectations.
Pharmaceuticals giant AstraZeneca also rose 5% after it upped its earnings guidance and reported better than expected third quarter profits. Shares were up 127p at 2550p.
Advertising group WPP was another blue-chip riser, even though boss Sir Martin Sorrell warned that 2009 will be a “very tough year”. He accompanied this with a weaker than expected revenues performance in the third quarter, causing shares to open lower.
However, the stock later rallied to leave WPP 9% or 31p higher at 363.5p.
Transport firms were suffering amid the recession fears, with analysts raising concerns that rail passenger volumes could be hit.
Stagecoach was the worst affected in the sector, down 15.3p at 176.9p, followed by FirstGroup, which fell 25.25p to 392p.
Outside the top flight, shares in nightclubs group Luminar slid 11% or 19.5p to 160p after it reported weaker sales and City analysts cut profit forecasts for the current financial year.
The biggest FTSE risers were Old Mutual up 9.2p at 60p, Vedanta Resources up 105.5p at 775.5p, Cairn Energy ahead 204p at 1550p and Amec up 62.5p at 493.25p.
The biggest FTSE fallers were Admiral Group down 190p at 900p, Stagecoach Group down 15.3p at 176.9p, British American Tobacco down 129p at 1690p and FirstGroup off 25.25p at 392p.