Economic optimism shines on FTSE

Renewed economic optimism helped the FTSE 100 Index push past the 6,000-mark yesterday despite profit taking in early trading on Wall Street.

News of a rebound in the UK construction sector added to cheer over upbeat manufacturing data in both the UK and US the previous session.

The Footsie closed 42.25 points higher at 6,000.07 - a rise of 0.7 per cent - after Tuesday's 1.6 per cent surge, despite a lacklustre start on New York.

The Dow Jones Industrial Average clung to its opening mark in early trading, with little support offered by decent profits from Time Warner, chocolate giant Hershey and AOL.

US investors were taking profits after the Dow rose above 12,000 for the first time in two-and-a-half years on Tuesday.

Markets worldwide have been spurred on by encouraging economic data, which has helped ease lingering concerns over the political unrest in Egypt.

Survey data showing a rebound in the UK construction sector last month after a snow-hit December helped extend gains in London.

The figures also sent the pound surging to a three-month high against the dollar. Sterling rose to $1.62 and gained strength against most major currencies, up 0.5 per cent to €1.17.

Commodity firms were among those stocks benefiting the most on the Footsie. Lonmin was the sector's biggest gainer, up 69p to 1,768p, while Rio Tinto followed with a 163.5p gain to 4,507.5p. Banks joined in the rally, led by HSBC with a 13.7p rise to 701.4p.

There was promising news from the Europe, where Germany and France reached a consensus on steps to boost coordination within the eurozone as part of an anti-crisis package that will also see the scope of Europe's bailout fund bolstered.

Lothar Mentel, chief investment officer at Octopus Investments, said: "Investors are looking for more proper answers to all the issues that are still there from the financial crisis.

"Once they have been answered, then those doom-mongers will have a less of an argument to cause these short-term stampedes," he said, referring to recent volatility on the FTSE 100.

Lambert & Butler maker Imperial Tobacco was the star performer on the FTSE 100 as its first-quarter trading update revealed a return to sales growth.

The world's fourth-biggest cigarette firm rose 6 per cent or 106p to 1,900p as it said sales volumes lifted 1.2 per cent and underlying net revenues rose 5 per cent in the three months to 31 December.

A number of stocks also dropped into the red as they turned ex-dividend, meaning new investors will not take part in the forthcoming dividend payout. This saw already under-pressure tour operator TUI Travel suffer further losses.Its shares, which have been hit by the Egypt crisis in recent days, fell 4.5p to 247p.

In corporate news, merger talks between struggling retailer JJB Sports and its rival JD Sports Fashion sent shares in JJB 17 per cent higher, up 0.8p to 5.4p, with investors hoping for an end to its survival battle.

JD Sports lost earlier gains, down 3.5p to 844p, as the market digested the prospect of a potential 700-store sportswear giant being created.