City happy to see Wall Street bounce

LONDON'S Footsie resumed its winning run yesterday after gains on Wall Street helped steady nerves in the City.

Fresh worries over Europe's sovereign debt crisis had threatened to put the brakes on the recent progress seen on both sides of the Atlantic.

However, an improved start to trading in America helped the FTSE 100 index to recover Tuesday's lost ground as it closed 21.92 points higher at 5,429.74.

The news that Portugal managed to raise €1 billion (822 million) in a debt auction with strong investor interest helped to ease some of the concerns.

As well as London's decent shares performance, the pound strengthened against the dollar and euro after the latest manufacturing output figures offered a picture of a sector just about holding its own in uncertain conditions. Sterling rose nearly 1 per cent to $1.55 and €1.22.

Despite the wider market recovery, banks continued to struggle as investors remained cautious in the wake of a report that suggested Europe's major players held more risky government debt than thought during recent stress tests.

Amid a dramatic week for the sector, Barclays dropped 2 per cent, or 6p, to 308p as Tuesday's news of Bob Diamond's promotion to replace John Varley as chief executive continued to draw an uncertain reaction from investors.

HSBC, which is due to lose Stephen Green as executive chairman later this year, fell 7.6p to 654.8p, while Royal Bank of Scotland was off 0.3p to 45.8p.

A fall in commodity prices, including the benchmark price of crude oil, put pressure on a number of stocks. Among them, Vedanta Resources fell 8p to 1,972p and BHP Billiton eased 2.5p to 1,890p.

On the risers board, chip designer Arm Holdings jumped 6 per cent after broker UBS issued a downbeat assessment of the European semiconductor market, but made an exception for the Cambridge-based firm as it raised its price target. Shares were 21.4p higher at 387.7p.

It was followed on the way up by oil giant BP as shares overcame the fall in crude prices to post a 5.35p improvement to 412.15p.This came after ratings agency Fitch upgraded BP's debt from its lowest investment grade "BBB", up to "A".

Fitch said the upgrade "primarily reflects an end to the threat of further leaks from the Macondo well in the Gulf of Mexico".

BP also released a report into the spill in which it said a series of complex events, rather than a single mistake or failure, led to the tragedy.

Among the Scottish stocks, Galashiels-based drug developer ProStrakan was unchanged at 53p despite chief financial officer Allan Watson buying 30,000 shares at 53.73p each.

His buying spree - which came a day after chief executive Wilson Totten resigned amid delays with two of the firm's drugs - took Watson's total holding to 47,426 shares.

Aberdeen-based SeaEnergy rose 4.4 per cent, or 1p, to 23.5p after the Aim-listed off-shore wind power developer signed a deal with the Crown Estate.

Under the agreement, the Crown Estate will pay 1.4m for environmental and geophysical surveys at the Inch Cape wind farm development, which SeaEnergy is building with Npower.