FTSE moves into positive territory

The London market pulled into positive territory today as early gains on Wall Street helped boost sentiment.

Investor nerves were rattled yesterday as the FTSE 100 Index joined other world indices in suffering hefty falls, putting a dent in gains that have seen markets climb to levels not seen since the onset of financial crisis.

But a positive swing in the US helped the Footsie recover some of Monday’s 1.5% fall to end the day up 40.8 points at 4685.8 today.

The Dow Jones Industrial Average rose 0.8% in early trade following stronger than expected second quarter results from DIY retail giant Home Depot.

But the market’s gains were being held in check by mixed earnings reports from retailers and a government report showing construction of new homes fell more than expected in July.

Figures in the UK showing inflation unchanged at 1.8% failed to unnerve the market, even though the result for July was higher than forecast.

In thin trading, financial firms and miners weighed on to the Footsie risers board following yesterday’s falls.

HSBC rose almost 3%, up 18p to 656p, following an upgrade from Goldman Sachs, while Royal Bank of Scotland lifted 1.29p to 46.18p and Lloyds Banking Group added 1.76p to 96.76p.

Among the miners Rio Tinto was 37p higher at 2282.5p after moving to reduce debt with a deal to sell the bulk of its Alcan Packaging business for £1.2bn (€1.4bn), although the stock had risen higher earlier in the day.

Eurasian Natural Resources led the gains, up 18.5p at 777p, Xstrata rose 16p to 758p while Kazakhmys added 16.5p to 880p.

Insurers were also on the front foot after a decent set of interim results in the sector last week. Legal & General surged 2.8p to 70p and Aviva rose 6.3p to 384.1p, while Friends Provident gained 1.6p to 76.95p.

British Land was the top tier’s chief faller despite reporting a smaller than expected fall in the value of its property portfolio. Shares, which have been inflated recently by takeover speculation, opened 1% higher but were later down 13.2p at 483p on fears economic conditions will squeeze rental income.

Marine services business James Fisher climbed to the top of the FTSE 250 after it unveiled the £5.25m (€6.1m) acquisition of MB Faber, a Lancashire-based specialist in the nuclear and aerospace industries. The deal cheered shares, which lifted 8% or 37.5p to 497.6p.

Meanwhile, car dealership Pendragon fell 2.25p to 42.75p after it revealed a fall in first-half profits but said demand was improving in the used and new car markets.

And Barratt Development was lower for a second successive session as investors continued to fret about the prospect of a £500 million rights issue. Shares in the housebuilder were off 8p at 218.4p.

The biggest Footsie risers were Amec up 31.5p at 744.5p, Legal & General up 2.8p at 70p, Intercontinental Hotels up 24.5p at 725.5p and Rexam up 7.3p at 259.3p.

The biggest Footsie fallers were British Land down 13.2p at 483p, Vedanta Resources off 31p at 1690p, Invensys down 4.1p at 248.5p and Petrofac down 9p at 873p.