Footsie cashes in on $50bn move to bolster US banks

FINANCIAL shares drove a strong end to the week as more positive economic data and a boost in federal aid across the Atlantic pushed London's shares upwards.

The US Federal Reserve announced a further $50 billion (25bn) funding package to banks, which sent their stock up strongly. Shares were also boosted by hopes of a further rate cut from the Bank of England next week.

Edinburgh-based Halifax Bank of Scotland, Britain's biggest mortgage lender, was the strongest riser in the sector, adding 30.5p, or 6.6 per cent, to 495.5p. Royal Bank of Scotland rose 5.6 per cent, or 19.25p, to 365.25p and Alliance & Leicester, climbed 29.5p to 540p.

A strong start to trading in London was boosted by US job figures, which gave Wall Street a positive opening. The FTSE 100 index of the UK's leading shares ended the day up 128.2 points at 62,15.5, the highest it has closed since mid-January.

Insurers followed banking shares upwards, buoyed by both the strong performance of the wider market and on reports that German group Allianz may be considering a large acquisition in the UK insurance sector.

Leading the sector, Admiral rose 46.5p to 906p, while Prudential advanced 29p to 726p and Standard Life closed up 11p to 263.75p.

But banks and insurers were all outperformed by building supplies firm Wolseley, which rose more than 8 per cent yesterday on hopes of a strengthening economy in the US, where it does most of its business. The shares in the group closed up 41.5p at 541.5p.

Dairy Milk maker Cadbury enjoyed a mixed session in its first day trading as a pure confectionery firm after spinning off its American drinks arm. Shares slipped on a downbeat assessment of the US business but ended up 18p at 640p.

Base metal prices were again on the advance on expectations of tight supplies. The biggest benefactors were Kazakhmys, up 58p at 1,673p, and Xstrata, which added 159p to 4,191p.

Retail shares were also back in fashion as the market bet on conditions on the high street improving. B&Q-owner Kingfisher was one of the strongest performers, adding 7.9p to 138.9p, while clothing chain Next added 78p to 1,225p ahead of a trading update next week. Marks & Spencer ended the day up 18p 399p.

One of the only significant fallers on the index was East Kilbride-based nuclear operator British Energy. Shares in the company have been driven to record levels on the prospect of a bidding war, but the group lost 29.5p to 728.5p yesterday on reports that German energy giant RWE, one of the first names mentioned in the battle, was not expected to make a bid.

Strong news from the US sent oil prices down early in yesterday's trading session, hitting oil companies. Edinburgh-based Cairn Energy slipped 7p to 3,073p, while rival BG added 1p to 1,261p.