Footsie resumes record rally

LONDON'S blue-chip share index overcame early jitters to resume its 25-year record summer rally yesterday.

Big gains from heavyweight stocks such as Vodafone drove the market to a new ten-month high and further towards the key 5,000 barrier.

The Footsie had fallen more than 30 points early in the session, but recovered to close 20.6 points, or 0.4 per cent higher, at just below 4,917.

US shares were up at the close of play in London after a report revealed US consumers are regaining confidence and following news of Ben Bernanke's reappointment as Federal Reserve chairman.

Stephen Pope, chief global strategist at Cantor Fitzgerald, said: "We've seen a bit of rotation, some profit-taking this morning, which is a healthy thing. But this is a market that is not to be denied."

Nationalised Royal Bank of Scotland was one of those to race higher on market talk that it may be able to pay back some of the government's 70 per cent stake. Its 3.9 per cent shares gain saw taxpayers turn a paper profit of more than 1 billion on the holding.

The FTSE 100 Index was driven higher by telecoms firms such as Vodafone and Cable & Wireless after a sector-wide upgrade by JP Morgan.

The broker said that while metal and mining stocks had outperformed telecoms by 30 per cent since March, the time was now right to reverse the exposure.

Vodafone rose 3.1p to 134.15p and Cable lifted 4.1p to 148p.

The JP Morgan note dealt a blow to the commodity sector, with Kazakhmys retreating 35p to 945p, Antofagasta off 24.5p at 789.5p and Eurasian Natural Resources 22.5p lower at 874p.

Lloyds Banking Group was also lower after a recent strong run, down 0.14p to 107.83p, in a mixed session for banks. RBS, meanwhile, soared to its highest close since the beginning of the year, up 2p at 53.75p. With the average taxpayer share bought at 50.5p, the rise lifted the state's shareholding above water, despite market speculation deeming any early payback of government shares as highly unlikely.

Elsewhere in the Footsie, car insurer Admiral fell 3 per cent or 28p to 1,044p, despite profits rising 5 per cent to 105.3 million and signs of a move to expand into the American market.

In the FTSE 250 Index, Punch Taverns enjoyed a rare rally after the pub company reported a steadier trading performance at its tenanted estate. Shares rallied 23.3p to 130.9p, a gain of 22 per cent.

It was followed closely by office space company Regus, which climbed 15 per cent or 12.5p to 96p after the company increased its dividend, despite a 7.4 per cent drop in half-year pre-tax profits.