Hopes of rates cuts help share prices recover ground

SHARES in London moved higher yesterday, recovering after losing 1.7 per cent in the previous two sessions.

The FTSE 100 index closed up 63.4 points at 6,677.7, helped by renewed hopes for a cut in interest rates, after minutes from the Bank of England's last rate-setting meeting showed members considered cutting borrowing costs in the wake of the Northern Rock crisis.

While Northern Rock was the top riser, the buoyancy in the index was helped by Tate & Lyle.

The sugar maker advanced 32.25p to 455p after Panmure Gordon highlighted the European Union was likely to approve the import of four genetically modified crops next week which may help prices of Tate's US corn gluten.

Late last month Tate issued its third profit warnings in eight months in part because of weak US corn gluten feed prices reflecting a European import ban.

Mining giant Rio Tinto was one of the session's top fallers after it disappointed investors with an update showing a 6 per cent fall in third quarter copper production. Rio Tinto shares were 65p lower at 4,354p, although shares elsewhere in the sector picked up from earlier losses with Lonmin up 23p to 3,601p and Vedanta Resources lifting 24p to 2,189p.

Banking shares made progress after a disappointing couple of sessions, with HSBC lifting 14.5p to 964p. Northern Rock was the exception, falling 16p to 207.5p amid continued uncertainty over prospects for the group.

Energy shares gave back some of their gains from Tuesday, despite oil prices surging to a new record high of about $89 a barrel. BP shares fell 7.5p to 619.5p and Royal Dutch Shell dipped 8p to 2,073p.

Shares in Morrisons gained 11.75p to 298.75p after the latest industry figures indicated strong growth in the supermarket sector. Morrisons attracted special attention because its figures showed a slight improvement in performance.

Associated British Foods was 24.5p ahead at 849p.

Telecoms group Carphone Warehouse was up 12p at 341.5p after it signed a multi-year outsourcing deal with Indian firm Patni Computer Systems.

The news involving Scottish & Newcastle caused shares in a number of other leisure firms to rally.

SABMiller, which recently announced plans to merge its US arm with rival Molson Coors, rose 33p to 1,462p, while in the pubs sector Punch Taverns added 14p to 1038p.

In the second tier, soft drinks firm Britvic leapt 7 per cent, or 22.5p, to 340p after it posted an upbeat trading statement showing the firm's resilience to the summer's poor weather.

Britvic said it remained comfortable with operating profit estimates of up to 81 million.

LSL Property fell 28p to 142p after it said the outcome for the financial year will fall short of its previous expectations because of the deteriorating market.