Markets: IMF thumbs-up gives boost to FTSE

THE International Monetary Fund's (IMF) endorsement of the UK government's deficit-cutting plans helped the London market to edge ahead yesterday.

Progress was kept in check though by broader fears over the strength of the global recovery.

The FTSE 100 Index closed 8.15 points higher at 5,863.16 after the IMF said setbacks to the UK's economic recovery were temporary and Chancellor George Osborne's moves to cut the deficit were "essential".

But with no economic reports to move the markets, traders continued to focus on dismal US jobs figures released last week.

Yusuf Heusen, senior sales trader at IG Index, said: "Indices have been in decline for a month now and the jury is still out as to whether this is just a healthy correction or the beginning of the end for the 27-month rally for global share prices."

In London, progress was limited as the eurozone once again came under scrutiny amid fresh concerns over the health of Spain's economy after a political party claimed one of its largest regions was bankrupt.

The safe haven of the dollar rose against the pound to $1.63. Sterling was also down against the euro at €1.11.

Among stocks under pressure, Lloyds Banking Group fell 1.8p to 46.9p after its new chief executive said the problems at the bank were more deep-seated than he had imagined and that it will take three to five years to achieve his aims. The wider banking sector was still dogged by concerns over the pace of the global economic recovery, as Barclays dropped 1.5p to 264p and HSBC eased 1.5p to 625.8p.

British Airways parent International Airline Group (IAG) came under pressure after an industry body warned airlines are expected to make just one-fifth of the profits they made last year as higher oil prices increase the cost of flying and deter cash-strapped customers. The International Air Transport Association forecasts that airlines will make profits of $4 billion (2.4bn) in 2011, a 78 per cent drop from 2010's $18bn. IAG was down 7.1p at 229.6p, while Thomson Holidays owner TUI Travel dropped 2.6p to 225p.

The biggest rise in the top-tier index came from commodities trader Glencore, which lifted 10p to 515p after analysts at Deutsche Bank issuing a "buy" recommendation. The rising price of copper and other metals helped miners, as BHP Billiton added 20.5p to 2,326p, Kazakhmys advanced 15p to 1,278p and Rio Tinto was up 40.5p at 4,148p.

SuperGroup, owner of the SuperDry fashion label, dropped nearly 7 per cent after the store slashed prices by 20 per cent at the weekend. The sale is SuperGroup's first in the UK and raised concerns that the company, which frequently posts forecasting-beating profits and sales, is reaching saturation point. Shares were 68p lower at 969p.

Edinburgh-based hospital billing software firm Craneware was up 17.5p or 3.2 per cent at 560p after Numis raised its rating from "hold" to "add".The upgrade follows last week's presentation to analysts.

Scottish & Southern Energy was down 9p at 1,371p despite the Perth-based utility unveiling a gas supply deal with Statoil for its Peterhead power station. Analysts at RBS Equities also upped their target price on SSE from 1,365p to 1,500p.