Footsie surges to 21-month high

BRITAIN'S leading share index rose to its highest close in 21 months yesterday as optimism from the US buoyed hopes of a recovery.

On Monday night the US Federal Reserve said that there were some encouraging improvements in the American economy but that it was in no hurry to tighten monetary policy.

There was also momentum created by Japan, where the central bank indicated it would offer cheap loans to fight inflation.

Anthony Grech, market strategist at IG Index, said: "With cheap and easy cash on tap for the foreseeable future and a pretty decent bill of health for the world's largest economy, it has been no surprise to see markets rally."

The FTSE-100 index of Britain's largest public companies rose 24.2 points to 5,644.63, having traded as high as 5,658. Meanwhile the midcap FTSE-250 index closed up 78.46 at 10,008.5, its first close above the 10,000 level since midway through 2008.

Stronger commodity prices meant miners dominated the risers board, with Fresnillo up 28p to 854p and Kazakhmys ahead by 36p at 1,532p.

Energy companies were also higher after crude oil stocks in the United States rose more slowly than expected, boosting prices to close to $83 a barrel.

Shares in BP rose 8.3p, or 1.3 per cent, to 630.7p, while Cairn Energy, Scotland's largest oil company, rose 2.1 per cent to 388.4p, a fresh record high.

The biggest risers of all were Autonomy, up 79p at 1815p, and Resolution, which is about to be thrown out of the FTSE-100, but which closed up 2.4p at 73.95p yesterday.

B&Q owner Kingfisher was another strong gainer, up 2 per cent to 228.4p, after HSBC upgraded its rating on the retailer and lifted its target price to 310p ahead of the group's results next week.

Next, also reporting next week, rose after the owner of rival Zara reported a 5 per cent rise in annual profits and said sales had been strong in the period since the start of February. Shares in Next climbed 35p to 2069p.

Security group G4S continued to suffer a hangover following its annual results on Tuesday, when it warned that it expected no organic growth this year. Shares slipped another 13.3p to 255.9p to make it the Footsie's biggest faller for a second straight session.

Standard Life also dropped sharply, down 8.4p to 208.3p. Elsewhere Man Group, Britain's largest listed hedge fund, dropped 9p to 237.3p, while travel group Thomas Cook eased 7.1p at 244.9p.

Among the midcaps, transport companies were all higher after Arriva, the operator of the CrossCountry rail franchise, confirmed its second takeover approach in as many months.

Arriva closed up 16.8 per cent at 677p, while Stagecoach, FirstGroup and National Express all rose around 3 per cent.

Dana Petroleum rose to its highest level since mid January on speculation that it is planning to swap some of its exploration assets in the North Sea for more production assets. Shares in Aberdeen-based Dana closed up 2.7 per cent at 1,198p.

Meanwhile, shares in pubs chain JD Wetherspoon remained under pressure after a broker downgrade on Monday.

The stock slipped 20.8p to 498.2p.

On the Aim, Dawson International, the Kinross based textiles group, rose 11 per cent on news that a company owned by non-executive director Giovanni Ghione had acquired another 2.2 per cent of its shares, taking his stake to 10.15 per cent.

Ghione's company, Pontek, is deemed to act in concert with another major shareholder, Fairmont, which owns almost 8 per cent of Dawson.

Shares in Dawson closed up a quarter of a penny at 2.5p.