Markets: FTSE back at pre-earthquake levels

AMERICAN economic cheer helped maintain the recovery on the London market yesterday as world stock exchanges continued their bounce back from the Japanese crisis.

The FTSE 100 Index has now returned to levels seen before the Japanese earthquake struck, closing 19.89 points or 0.3 per cent up last night at 5,900.76.

David Jones, chief market strategist at IG Index, said: "While it would be over-pessimistic to describe this week's strength as a 'dead cat bounce' before the market turns south once more, the solid rally that had been in place since July last year on the FTSE has definitely received some body blows in the past month.

"At the moment it is still difficult to come up with a convincing case for a sustained push by the FTSE 100 through 6,000 - we could well see sellers moving back in next week and the brakes start to come on."

Gains were spurred on by news that the US economy grew at a faster pace than expected at the end of last year, which saw the Dow Jones Industrial Average on Wall Street rise more than 70 points in early trading.

Investors shrugged off eurozone debt woes as concerns about Portugal's worsening position overshadowed a restructuring agreement among European leaders for the bail-out fund.

Portugal's troubles saw Barclays edge lower, down 0.9p to 290p, given its heavy exposure to the Iberian peninsula.

Entertainment group HMV jumped 4.5 per cent or 0.75p to 17.5p, as the stricken retailer confirmed it was exploring options for bookseller Waterstone's, although it denied it had received offers for the entire group.

The move will pave the way for a possible sale of the book chain and may throw HMV a lifeline as it battles to meet the lending criteria of a bank loan.

In the top tier, Reckitt Benckiser - which makes household products including Air Wick, Cillit Bang and Dettol - topped the risers board, lifting 96p to 3,160p after Bank of America Merrill Lynch changed its rating on the stock from "neutral" to "buy". The upgrade also benefited its rival, the Hellmann's mayonnaise owner Unilever, which climbed 17p to 1,886p.

Other risers included Aviva after reports that the insurance giant planned to sell its RAC roadside recovery business in a deal set to raise 600 million. Shares were 2.4p higher at 434p.

Retailers surrendered some of Thursday's gains, with Marks & Spencer down 7p at 351.1p, Next losing 24p at 2,019p and B&Q parent Kingfisher off 4.6p at 256.8p.

BP held firm despite a tribunal ruling that a 10 billion deal between the British oil giant and Russian government-owned Rosneft breached agreements with other BP partners.The shares rose 2.65p to 483.55p.

Outside the FTSE 100 Index, African Barrick Gold rose 2 per cent or 10p to 539p after delivering positive news to investors in a drilling update.

Aberdeen-based oil and gas explorer Xcite Energy gained 5.7 per cent or 19p to 351p following its full-year results.

Housebuilders gave back some of Thursday's gains, which were triggered by news of the UK government's direct shared equity scheme. Taylor Wimpey was down 1.4p at 42p, while Persimmon was off 11.3p at 467.7p.