FTSE touches year high

Sainsbury’s celebrated a strong rise in half-year results today in a buoyant session for the wider London market that saw it touch a year high.

Investors shrugged off gloomy comments from Bank of England Governor Mervyn King, warning that the UK had “only just started” on the path to recovery.

The FTSE 100 Index closed 36.2 points higher at 5266.8, but this was down from the year high of just over 5300 reached earlier in the session.

The prospect of interest rates remaining low into next year meant the pound was down against both the US dollar and euro.

Optimism was strengthened by the latest unemployment figures, which showed the smallest quarterly rise since spring last year.

But the Bank’s quarterly report stressed the strength of the UK economic recovery was highly uncertain and signalled a further three years of weak bank lending.

Royal Bank of Scotland was the biggest faller in the financial sector, easing 0.66p to 38.37p.

Barclays fell back 2.35p to 323p, but Lloyds Banking Group climbed almost 5%, or 4.04p to 89.25p, after it indicated it had received high levels of investor interest in a part of its fundraising plans.

Among other stocks, Sainsbury’s rose after the supermarket reported an 18.5% rise in interim results to £307m (€339m) – bettering the £300 million expected in the market.

The chain’s shares rose 10.6p to 338.2p – or 3% – despite offering caution about slowing sales growth over the months ahead.

Supermarket chain Tesco was also a riser, up 4.15p to 418.7p while Morrison’s gained 2.8p to 287.8p.

Miners were boosted by strong metal prices. Rio Tinto climbed 75p to 3118p after broker Credit Suisse raised its target price to 3300p and said the company had outperformed rival BHP Billiton.

Utility firm Scottish & Southern Energy lost ground on news it is facing pressure from rising wholesale gas prices and operating costs.

Shares fell 7p to 1073p, even though the company posted a 36% rise in half-year profits and said it was on track to meet full-year expectations.

Reed Elsevier was the leading Footsie faller, down 19.5p to 465p, after the publisher said chief executive Ian Smith had left the company less than a year into the top job.

Fellow publisher Johnston Press was moving in the opposite direction, ahead 5%, up 1.25p to 28.25p after it confirmed ongoing improvement in advertising revenues.

The Scotsman and Yorkshire Post owner said ad declines had eased to 19.1% in the 10 weeks to October 31 – substantially better than the 32.7% plunge seen in the first half of its year.

The biggest Footsie risers were Randgold Resources up 281p to 4858p, Fresnillo up 49.5p to 892p, Segro up 20.1p to 364.7p and Legal & General up 4.5p to 85.85p.

The biggest Footsie fallers were Reed Elsevier down 19.5p to 465p, Cobham down 4.3p to 226.9p, Royal Bank of Scotland off 0.66p to 38.37p and BP down 9.8p at 583.6p.