FTSE finishes up almost 50 points

A late rally rescued a lacklustre session for investors today as financial markets gave a lukewarm response to the new coalition government.

The FTSE 100 Index spent much of the session in negative territory before closing 49.2 higher at 5383.4 following a positive start in New York.

The Dow Jones Industrial Average was 1% higher at the time of London's close as domestic issues returned after a week of fretting about the euro debt crisis.

The boost for Wall Street came from a report showing exports jumped in March to their highest level since 2008, signalling a further improvement for the manufacturing sector after consistent improvement in recent months.

Currency markets in London were initially reassured by the UK's first coalition government since the war, but this was offset by later comments from the Bank of England that risks to the UK economy remain on the downside.

This prompted analysts to put back their expectations for interest rate rises, causing a reversal in sterling's initial gain against the dollar.

The pound retreated from above the $1.50 barrier to near $1.48, while it dipped against the euro after Spain unveiled new spending cuts that helped ease worries about the continent's debt crisis.

Banks were among those in uncertain form, with Royal Bank of Scotland surrendering an initial gain to stand 3% or 1.6p lower at 48.4p. Lloyds Banking Group fell 0.8p to 59.5p.

Speculation of a takeover move by Standard Chartered for the Nedbank business owned by Old Mutual caused shares in the latter to rise by 4%, or 4.6p to 119p. Standard was 1p higher at 1703p.

Elsewhere in the top flight, shares in catering giant Compass moved in the right direction after it reported a 14% rise in first half profits and said it was hopeful of further sales growth in the second half.

It reported a slight acceleration in the rate of new contract wins and said 93% of existing contracts have been retained. Compass shares were 28p higher at 557.5p - the highest level since 2001.

Outside the top flight, shares in ITV rallied 7% despite the Competition Commission's decision that rules designed to protect advertisers from the broadcaster's market dominance should stay in place.

With the watchdog agreeing that there should be a wider review of the whole system for selling TV advertising, ITV shares rose 3.95p to 61.45p.

Barratt Developments - up 6.7p to 123.2p - was another strong riser after it said it expected to report an underlying profit in the second half of its financial year. Other housebuilders were on the front foot with Bovis Homes up 13.2p at 395.3p and Persimmon ahead 16.8p at 453.9p.

Logistics and transport group Stobart rose 4.9p to 155p after it said new contracts and an improvement in margins had boosted annual profits by 54%.

The biggest Footsie risers were Thomas Cook up 13.1p at 232.1p, Rolls-Royce ahead 31.5p at 611p, Compass up 28p at 557.5p and Tullow Oil ahead 54p at 1142p.

The biggest fallers were Royal Bank of Scotland down 1.6p at 48.4p, Lloyds Banking Group off 0.8p at 59.5p, Unilever down 19p at 1893p and BP off 3.9p at 541.6p.