Markets: After the rally, the consolidation

LONDON'S Footsie edged higher yesterday after a session of see-sawing between modest gains and losses.

But the FTSE-100 eventually held on to the gains made in Wednesday's stellar 2.7 per cent rally, closing up 4.63 points at 5,371.04.

There was little of the exuberance seen on Wednesday following positive manufacturing data from the US and China as traders awaited non-farm payrolls data today, although figures yesterday showed positive signals from the US housing market.

Ben Critchley, sales trader at IG Index, said: "It's been a far from convincing session for the London index with traders unwilling to commit to further gains despite a resurgence in merger and acquisition chatter. Markets may seem unusually calm given the steady return to work after the summer break but these conditions cannot be expected to last long."

The pound was steady at $1.53 against the dollar but dipped to €1.20 against the euro as the single currency was helped by a successful Spanish bond auction.

Wall Street was flat in early trading with little to drive stocks. The European Central Bank held interest rates at 1 per cent as expected and said it would extend support for banks into next year. Eurozone growth for the second quarter of 2010 was confirmed at 1 per cent but data in the UK was more gloomy as construction figures showed slowing growth for a third month in a row, and the Nationwide said UK house prices also fell 0.9 per cent in August.

The news had little impact on many housebuilding stocks in the FTSE 250, with Redrow and Persimmon up 3.1p to 121.2p and 13.7p to 391.8p respectively.

Most of the corporate news came from other players in the second tier after a host of corporate updates.

DSG International - which owns Currys and PC World - lost early gains despite a 6 per cent rise in UK like-for-like sales during the first quarter, helped by Apple's iPad and demand for flat-screen televisions. Shares were off 0.2p to 25.2p.

Recruiter Hays was 3.55p higher at 97.55p after reporting an improving outlook across most of its markets, while transport group Go-Ahead added 77p to 1,165p after a better-than-expected profits performance.

One of the strongest performances in the FTSE 250 came from own-label household goods firm McBride, which cheered 13 per cent or 19p to 160p after lifting first-half profits and a 12 per cent dividend hike.

News of a 90 million takeover of Aim-listed restaurant chain Carluccio's by Middle East retail giant Landmark helped lift shares 47 per cent or 45p to 141p.

In the FTSE 100 Index, Cable & Wireless Worldwide was down nearly 3 per cent or 2.2p to 69.8p after the bid gossip which lifted shares on Wednesday died down. But TUI Travel - another target of takeover talk - was up 4.8p to 221.2p.

Also among the Footsie risers was electricity generator International Power, which added 9.1p to 387.6p after analysts at Deutsche Bank upgraded their investment recommendation on the firm to "buy".

The company is merging with France's GDF Suez to create one of the world biggest power groups.