FTSE up as euro fears played down

The FTSE 100 Index rose 21.79 points or 0.4 per cent to 5,340.38, with sentiment aided by early gains on Wall Street ahead of a major speech by President Barack Obama when he was expected to unveil a string of new job creation programmes.

Will Hedden, sales trader at IG Index, said: “Markets moved without any real conviction.

“Cries of ‘as you were’ resounded through the markets from both the Bank of England and the ECB on official interest rate and asset purchase decisions.”

ECB chief Jean Claude-Trichet’s comments that the risks to eurozone growth are rising and a decision to keep eurozone rates on hold at 1.5 per cent hit the euro, which fell to €1.148 against the pound.

Sterling rose against the dollar to $1.606 after the Bank of England’s decision to keep UK interest rates pegged at a record low of 0.5 per cent.

A late rally by the miners boosted the index, with Vedanta Resources 61p ahead at 1,451p and Fresnillo 90p higher at 2,147p. Commodity trader Glencore was up 30.8p at 436.5p. High street banks had another unsettled day and gave back early gains, sparked by talk that any introduction of a ring-fence between their retail and investment arms could take years to implement, to close little changed.

The Independent Commission on Banking report is published on Monday but after an early jump Royal Bank of Scotland added just 0.28p to 22.74p, shares in Lloyds Banking Group were up by 0.17p to 32.9p and Barclays fell 1p to 159p.

The recent bumpy ride at insurer Admiral continued, with its shares 33p lower at 1,364p after the Office of Fair Trading issued a “call for evidence” over competition in the motor insurance sector following average premium increases of up to 40 per cent in a year.

Shares in Admiral, which owns Confused.com, have fallen by about a fifth since June amid worries over the rising cost of personal injury claims.

Retail stocks enjoyed a rare upbeat session after supermarket Morrisons posted higher profits and the owner of Argos limited its slide in sales.

Home Retail Group’s trading update was not as bad as some analysts feared, even though sales at Argos dropped by 9 per cent over the last three months.

The update caused shares to rise 2 per cent or 2.3p to 117.8p in the FTSE 250 Index and helped reassure investors in top flight retail stocks.

Marks & Spencer was a big riser in the FTSE 100 after speculation that a private equity firm may be interested in buying a 3.7 per cent stake currently held by US investment firm Brandes. Shares were 8.1p higher at 321.9p, a rise of 3 per cent.

Morrisons was 12.2p higher at 301.6p after meeting City forecasts with an 8 per cent rise in half-year profits.

A rise in oil prices after a US government report showed crude stocks fell more than expected last week helped the Scottish oil firms.

Bowleven was up 5.75p to 135.75, while Cairn Energy gained 6.1p at 325.2p.