Italian bond auctions ease Eurozone fears

Two successful Italian bond auctions eased fears about the eurozone debt crisis today and helped London’s leading shares index make cautious gains.

Two successful Italian bond auctions eased fears about the eurozone debt crisis today and helped London’s leading shares index make cautious gains.

The auctions saw the debt-ridden nation’s medium borrowing costs fall back sharply from a month ago, as market confidence grew in its ability to pay its way.

The FTSE 100 Index rose 18.5 points to 5531.2, allowing it to continue its recent rally following the Christmas break.

However, it fell away from its earlier peak after the Dow Jones Industrial Average in the US opened down 0.4%, with materials and financial stocks dragging it down.

The weaker performance on Wall Street also saw the Cac-40 in France and the Dax in Germany surrender their earlier gains.

Asian markets had dropped off slightly overnight after Japan’s industrial output fell by a seasonally adjusted 2.6% last month – the first decline in two months.

Amid thin volumes, London’s leading shares index pushed higher despite a poor performance by heavily-weighted banking shares, which were among the biggest fallers following their run of gains.

Lloyds was down 0.5p at 25.2p, Barclays was off 4p at 175p, and Royal Bank of Scotland was 0.5p lower at 20.1p.

Broadcaster ITV was among the biggest FTSE 100 Index risers with a gain of 2%, up 1.3p to 65.7p even though reports suggest it has lost a Christmas ratings war with the BBC.

In the retail sector, spirits were lifted by initial signs that Britons abandoned some of their recent spending caution in the post-Christmas sales.

Supermarket group Tesco was 10.7p higher at 401.7p, while Next was up 12p at 2704p and B&Q owner Kingfisher lifted 1.7p to 247.7p.

In the second tier, Argos and Homebase owner Home Retail Group was up 3.9p at 86.7p, Halfords was 6.8p higher at 295.5p and Debenhams rose 1.2p to 57.8p.

Meanwhile, shares in bus maker Optare were up by more than a half after its rival Alexander Dennis threatened to gatecrash a deal that will hand control of the company to India’s Ashok Leyland.

Falkirk-based Alexander Dennis has requested information from Optare so it can consider whether to make an offer for the business.

The takeover interest comes a week after Optare announced that Ashok Leyland, which is part of the Hinduja Group in India, planned to increase its stake in the business to 75% through a £4m share placing by Optare.

Shares in Optare surged 55%, or 0.25p to 0.7p.

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