Latest BA deal gives FTSE wings

BRITISH Airways topped the FTSE-100 gainers' board yesterday after striking an agreement with unions over its pension schemes.

The settlement – separate to its current dispute with cabin crew – clears a potential hurdle ahead of a planned merger with Spanish airline Iberia.

Last December BA revealed that a formal valuation of its two final salary pension schemes had ballooned to 3.7 billion.

Under the latest agreement staff covered by the pension will contribute an extra 37 million a year in payments to maintain benefits.

The news sent shares in BA 5 per cent, or 10.6p, higher to 246p.

Elsewhere the FTSE-100 rose back above the 5,600 mark, closing up 26.6 points at 5,620.4 amid improving confidence over European economies. Ratings agency Standard & Poor's removed a warning that it might downgrade its debt rating on Greece, while EU finance ministers also said they had a vague blueprint for possible loans to help the Greek economy.

There was little direction from the US, where markets were treading water ahead of the latest meeting of the Federal Reserve, .

Mining companies were the main driver of the FTSE-100 as a weaker dollar supported base metal prices, with sterling approaching $1.52.

Eurasian Natural Resources was the sector's leading riser, up 33p, or 3 per cent, to 1,166p, while gold miner Randgold Resources, climbed 122p to 5,000p.

Security firm G4S slipped despite posting a 10 per cent rise in underlying profits to 500 million, as it warned that organic growth was evaporating.

Shares, which have rallied in recent weeks, dropped 9.4p to 269.2p yesterday, a fall of 3 per cent.

Royal Bank of Scotland rose on speculation that it is planning to restructure up to 10bn of its existing debt in a bid to boost its capital strength.

Currently the company can buy back debt as a discount to its face value, which would create a paper gain and boost its balance sheet strength. Shares climbed 0.6p to 43.3p.

Other banks making progress included Barclays, which climbed 8.9p to 357.5p, while HSBC rose 2.5p to 683.5p.

BT Group meanwhile climbed for a second successive session, up 1.7p to 126.4p, as it continued to benefit from yesterday's broker upgrade from Citigroup.

Royal Dutch Shell was another riser, up 26.5p to 1856.5p, after chief executive Peter Voser unveiled a strategy update that included plans for more cost savings and a production target of 3.5 million barrels of oil a day by 2012, up 11 per cent on last year.

Voser also appeared to ease concerns over the sustainability of its dividend payments, climbing that at $60 a barrel its cashflow would rise by 50 per cent by 2012.

In the mid cap FTSE 250, department store chain Debenhams dropped 0.8p to 70.2p after a trading update left markets underwhelmed.

Sales growth edged 0.3 per cent higher in the first half and profits are set to come in ahead of last year in line with City hopes.

On the Aim, Leuchars-based security group Croma leapt almost 50 per cent after announcing its largest ever contract win.

Croma said the three year contract, worth 3.4m a year, had been awarded by a London property company. It also announced a three-year contract worth 250,000 a year to provide security at "a major tourist venue in Edinburgh".

Chief executive Sebastian Morley, a former Black Watch captain, said the contracts would substantially increase Croma's contracted revenues. Shares rose 0.62p, or 45 per cent, to 2p.