Footsie on the up as BP's decline stalls

THE Footsie made welcome gains yesterday as oil giant BP pulled out of its recent steep declines, giving a boost to the wider index.

The FTSE 100 rose 59.86 points – or 1.2 per cent – to a two-week high of 5,211.18, having started the day on the front foot as a bigger-than-expected rise in US home sales lifted the mood on Wall Street overnight.

But the market eased from a near-2 per cent gain earlier in the session due to an indecisive start to trading on America's Dow Jones Industrial Average.

The Dow had surged initially because of positive US jobs news, but data showing a weaker-than-expected performance from the manufacturing sector soon pared back the gains.

Peter Dixon, economist at Commerzbank, said: "It's a very volatile situation we are in at the moment and when you have a market which is not unfairly valued and selling off, it tends to attract investors back in."

It was also another difficult day for the euro, which fell against the pound and the dollar as persistent eurozone concerns failed to budge.

Sterling gained 0.2 per cent to 1.2, while the single currency slipped to just below $1.22.

However, it was a better day for BP in a much-needed positive session for the stock. BP shares have slumped in value by more than a third following the Deepwater Horizon disaster.

But the stock started to rally late on during Wednesday's session and closed up 2.5p to 432.3p yesterday as the group also benefited from an increase in the price of oil to $74 a barrel at one stage, despite downgrades for the firm from ratings agencies.

Many miners were also on the rise thanks to firmer base-metal prices, although it was a mixed session for the sector and gold miner Randgold Resources was among a handful of blue chips in the red.

Randgold fell 155p to 5,975p as investors moved out of the traditional safe haven.

In a quiet session for corporate news, shares in Kingfisher – which owns DIY retailer B&Q – were 3 per cent higher as the company overcame the impact of poor weather to post a 13 per cent rise in first quarter UK profits. Shares rose 5.8p to 229.6p.

Chemicals firm Johnson Matthey enjoyed a similar rise after it reported a slight fall in full-year profits, but said the new financial year had got off to a good start. Shares were 15p higher at 1,570p.

A raft of commodity stocks rose because of more positive economic news as well as comments from one broker that the Australian government could compromise on its planned super-tax on the mining sector.

Petrofac soared 59p to 1,199p, while Eurasian Natural Resources gained 42.5p to 1,031p.

Broker upgrades also accounted for many risers, with advertising giant WPP adding 22.5p to 669.5p after UBS rated the firm a buy.

Insurer Aviva was another beneficiary after Daiwa analysts said the firm was likely to gain from the refocusing of investor attention on the UK life sector following the collapse of Prudential's bid for AIA.

Aviva was 13.2p dearer at 339.1p, while the Pru was 4.5p higher at 565.5p.

Among the other insurers, Edinburgh-based Standard Life was up 2.2p at 184.3p.