BT on the up but sterling pounded

BOTH Sainsbury's and BT grabbed the spotlight yesterday as strong corporate figures turned attention away from recent political and European sovereign debt worries.

The better-than-expected results ensured that the City overcame a lacklustre start to trading in New York to close 50.28 points higher at 5,433.73.

The rally meant the Footsie has now added more than 300 points since Friday night, at which point the index endured its worst week since March 2009, falling 7.6 per cent.

In contrast, the pound suffered another bleak session after the UK's goods trade deficit widened by more than expected. The pound stood at $1.46 against the dollar, having been trading at near $1.50 following the formation of the UK coalition government on Tuesday. Sterling was 1.16 against the euro.

BT topped the Footsie risers' board with an 11 per cent gain – up 13.1p to 133.6p – after it reversed last year's loss with a full-year profit of 1 billion and said it expected a return to revenues growth in 2012-13.

Chief executive Ian Livingston also set out plans for a major investment programme, including an extra 1bn on superfast broadband in the UK. The news was a far cry from a year ago, when shares slumped to a record low of less than 100p due to contract over-runs at its IT network services division.

Supermarket chain Sainsbury's also exceeded hopes after it posted full-year profits of 610 million, up 17 per cent on a year earlier and 10m better than forecast in the City.

Shares responded with a 10.5p rise to 338.5p, although analysts were split over the group's prospects amid worries about slowing sales and mounting pressure on shoppers.

Thomas Cook was another firm to receive a results' day boost, with shares up 4p to 236.1p after the tour operator narrowed half-year losses and said holidaymakers were reluctant to give up their summer break. It estimated the impact of April's volcano cloud disruption will be about 70m.

Outside the top flight, DSG International – which owns Currys – continued to impress after strong growth in UK electricals and the Nordic countries ensured like-for-like sales rose 6 per cent in the 28 weeks to 1 May. DSG, which said its transformation plans remained on track, rose 6 per cent or 1.7p to 30p.

There was a heavy fall for Trinity Mirror shares after the publisher of the Daily Record said trading remained volatile in the 17 weeks to 2 May.

The firm still expects a satisfactory performance in 2010, but said advertisers had been reluctant to spend in the run-up to the general election. Shares dropped 12 per cent, or 17.3p, to 121.5p.

Meanwhile, shares in nightclub operator Luminar lost one- third of their value after the company racked up huge losses for the year to 25 February and said there was no sign of a turnaround in recent trading. Luminar, which has been battered by the impact of youth unemployment, fell 13p to 27p.

Prudential slipped 3p to end the day at 562.5p, despite reports that regulators had agreed in principle to the insurer's $35.5bn (24.2bn) purchase of AIG's Asian unit and rumours it hoped to price its bumper rights issue within days.