Euro deal's a boost but US drags

A THIRD consecutive day of gains was notched up by the FTSE 100 index yesterday amid hopes of a rescue deal for the struggling Greek economy.

The top flight closed the day 20.2 points up at 5,132, although an uncertain start to trading on Wall Street took the gloss off even bigger gains earlier.

David Jones, chief market strategist at IG Index, said: "Those who live by the sword die by the sword, and a weak start for Wall Street saw the FTSE's gains decimated with astonishing speed as the US market opened heavily down."

A larger than expected US trade deficit in December pushed the Dow Jones industrial average into the red in early trading, while US Federal Reserve chairman Ben Bernanke also dampened the mood after signalling an end to emergency support measures for the economy. In London, meanwhile, stocks were improving amid speculation that eurozone countries will come up with a plan to help Greece as it battles to head off a potential sovereign default.

Reassuring comments from Bank of England Governor Mervyn King denying that the UK was next in line for a sovereign default also helped give blue-chips a boost.

But King added it was too early to call the end of quantitative easing efforts as the bank trimmed its economic recovery forecasts and signalled interest rates could remain at record lows of 0.5 per cent until the end of the year. This left the pound below 1.56 against the dollar and trading at about 1.13 against the euro.

Financial stocks enjoyed a decent session, with insurer Aviva one of the top risers amid vague bid rumours.

The stock added 17.1p or 361.6p or 5 per cent, while Lloyds Banking Group cheered 1.8p to 50p and Legal & General rose 2.1p to 72.2p.

Reckitt Benckiser was more than 2 per cent higher after the household products group posted fourth quarter and full-year figures which were in line with expectations. The company, which also revealed that it expected revenue growth of 5 per cent this year, saw shares rise 53p to 3,187p.

Among the few Footsie fallers, Shell was down more than 1 per cent or 25p to 1,652p, as the stock turned ex-dividend, meaning new investors will not take part in the next shareholder payout.

Outside the top flight, Trinity Mirror shares were 5 per cent higher after Tuesday's deal for the publisher of the Daily Record to buy regional newspapers belonging to Guardian Media Group. Shares rose 6.3p to 141.8p.

In the same sector, Daily Mail & General Trust slipped 3.5p to 439.1p, despite news of a January rise in advertising revenues at its national newspapers.

Elsewhere, snack food firm Glisten shot up 54 per cent, ending the day 47p higher at 133.5p, after Benecol maker, Finnish food firm Raisio, announced a deal to buy the group. Management will hold on to a 15 per cent stake under the takeover, which values Leeds-based Glisten at about 19.8 million.

Among the Scottish stocks, Dana Petroleum closed up 12p at 1,008p after announcing its second gas discovery in Egypt.

Other Scottish oil stocks were also on the rise, with Bowleven 1.5p ahead at 115.5p and Cairn Energy up 1.6p at 328.6p. But Melrose Resources dropped 5.7p to end the day at 304p.

Temporary power supply company Aggreko continued to rise after unveiling contracts in Oman and Panama on Tuesday. The Glasgow-based firm closed up 35p or 3.9 per cent at 930p.

Wolfson also carried on climbing after the upbeat outlook statement that accompanied Tuesday's full-year results. The Edinburgh-based firm ended the day up 5.5p at 142.75p.