FTSE recovery points to progress

LONDON'S Footsie recouped earlier heavy losses yesterday after another grim set of unemployment figures in the United States fuelled hopes that policymakers will take further action to prop up the global economic recovery.

But, rather than trigger a fresh sell-off for world markets, the data showing the US shed a further 95,000 jobs in September prompted a recovery as analysts said it will now require a substantial pick up in inflation before the Federal Reserve's next meeting in November to prevent more quantitative easing.

With that in mind, the Dow Jones Industrial Average climbed around 0.5 per cent to breach the 11,000 barrier in early trading, while the FTSE 100 Index recovered from a 50-point fall to end the day just 4.52 points lower at 5,657.61. The index gained 1.2 per cent over the course of the week and hit a five-month closing peak on Wednesday.

David Jones, chief market strategist at IG Index, said: "With the Dow probing the 11,000 mark as London closed, it does suggest that sentiment towards shares is still strong and markets are reasonably placed to make more progress next week.

"There still seems to be a buy-on-weakness attitude for the FTSE and, despite the odd wobble over recent days, investors seem confident of setting fresh five-month highs for the current recovery as October progresses."

Miners were encouraged by the prospect of more measures to boost the economic recovery, while the ongoing weakness of the dollar kept mineral prices high. The pound was 0.5 per cent stronger against the dollar, as well as against the euro.

Resources stocks dominated the risers board with Lonmin up 69p to 1,819p, Xstrata ahead 36p to 1,296p and Anglo American 61.5p stronger at 2,726p.

Elsewhere in the top flight, Barclays was closely watched after it emerged that Manchester City football club owner Sheikh Mansour of Abu Dhabi had effectively sold 220 million shares as part of a hedging transaction stemming from the support given to the bank during the financial crisis in 2008.

The blue-chip stock - which was also tipped as the front-runner to buy online bank Egg from CitiGroup - fell 6.8p to 297.25p, a drop of 2 per cent.

Marks & Spencer failed to make much headway despite a number of broker upgrades in the wake of better-than-expected trading figures on Thursday. Shares were up 1p at 411p as investors heeded warnings over the possible impact of difficult trading conditions in 2011.

The housebuilding sector was still feeling the effect of shock figures from Halifax on housing prices, which revealed a record 3.6 per cent fall in September.

After looking at the Halifax report, Panmure Gordon downgraded its recommendations on housebuilders Redrow and Taylor Wimpey, down 2.4p at 122.6p and 1.2p at 26.6p.

Elsewhere in the second tier, Thomas Cook was up 3 per cent after the holidays giant unveiled a deal with the Co-op to merge their high street travel businesses. Shares lifted 6.1p to 185.7p.

With more than 1,200 shops, the newly-formed company will be the UK's largest travel agent and second biggest in foreign exchange. The tie-up is expected to generate savings of around 35 million a year.