Footsie back in black on optimistic turn

Leading shares made some headway yesterday as hopes that governments around the world would take steps to bolster economic recovery fuelled investor optimism.

By the close, London's benchmark FTSE 100 index was up 14.79 points, or 0.3 per cent, at 5,672.4, more than reversing Friday's modest pull-back.

Bullish broker comment helped to lift Glasgow-based Weir Group and Petrofac, while Prudential, Autonomy and oil major BP were hit by broker downgrades.

Weir gained 2.4 per cent or 37p to 1,580p after UBS upgraded its target price for the engineering firm to 1,700p from 1,400p, while repeating its "buy" rating.

Separately, the Scots firm announced it had completed the acquisition of the valves business of BDK Engineering Industries - a deal unveiled at the start of last month.

Yusuf Heusen, senior sales trader at IG Index, said: "We have seen a very tight range for the FTSE and, despite US markets being open, it looks like the majority of Americans are taking advantage of Columbus Day to add another day to their weekend break.

"With inflation data out from the UK (today] and the minutes from the latest Federal Reserve meeting also due for release, traders in London did not need much of an excuse to sit on their hands."

In the US, a poll of economists found that they overwhelmingly expect the Fed to embark on another round of quantitative easing this year effort to prop up a struggling economy plagued by high unemployment.

Late in September, economists here said the chances of the Bank of England extending its quantitative easing scheme were on the rise.

The Footsie is up almost 900 points, or 19 per cent, since its 2010 closing low on 1 July.

Prudential fell 8p to 628.5p after JP Morgan Cazenove downgraded the stock from "neutral" to "underweight".

Bernstein Research downgraded BT and cut its target price following a decent run for the stock, which stood 2.1p lower at 146.9p. Other fallers included oil giant BP, which dropped 3.5p to 432.6p after Royal Bank of Scotland said investors should expect an initially conservative approach to dividends should the payouts return early next year.

Retailer Marks & Spencer fell 5.3p to 405.7p as HSBC worried about the trading outlook and said much of the good news found in last week's stronger-than-expected trading update was already factored into the share price.

Oil services group Petrofac led the market higher, after a lucrative contract win worth more than $250 million (156.8m).

The company announced it was to take over operational responsibility and facilities management of the Sajaa gas plant, in Sharjah, in the United Arab Emirates (UAE) in a five year deal. Shares closed 35p higher at 1,428p.

In a quiet session for corporate news, EasyJet was in focus after it announced a deal to end its long-running row with founder Sir Stelios Haji-Ioannou and secure its use of the "easy" brand.It will pay Sir Stelios 0.25 per cent of its revenues each year, fixed at 3.9m and 4.95m for the first two years, plus another 300,000 annually. Shares closed 2.7p higher at 454.3p.