FTSE rallies

London’s blue chip share index rallied towards the 4800 barrier today as investors shrugged off economic doubts.

The FTSE 100 Index recovered from a shaky start to stand 40.5 points higher at 4797.1 in mid-morning trade.

Thin summer trading volumes have added to the market volatility this week, but UK blue chips have shown resilient gains despite more hefty declines in Asian markets on concerns about the strength of the economic recovery.

Insurers were among those leading the Footsie gains as they received a boost from yesterday’s comments from US government-rescued insurance giant AIG that it would be able to pay back bail out funds and boost shareholder value.

Legal & General rose 4%, or 3.1p to 76.8p, while Aviva followed with a 11.3p gain to 400.6p. Motor insurance firm Admiral, which reports interims next week, added 22p to 1072p.

Energy giants BP and Royal Dutch Shell helped to prop up the Footsie after oil prices climbed to 73 US dollars a barrel, leaving the pair 6p higher at 523p and 26p stronger at 1609p respectively.

Other notable gains were seen from British Airways, which lifted 8.8p to 184.3p, and drinks group Diageo, with a 20p rise to 959.5p as it also prepares to release full-year results next week.

On a quiet day for corporate news, stronger than expected results from property search firm Rightmove meant its shares set a blistering pace at the top of the FTSE 250 Index risers board.

The stock rose 12% or 51p to 479.4p after it revealed half-year profits of £18.2m (€21m).

Analysts also predicted 2009 earnings upgrades of between 15% and 20% after Rightmove said results were likely to beat expectations.

Housebuilders joined the firm in making gains on the property market optimism, with Taylor Wimpey up 2.81p to 48.71p.