Modest gains of steady interest

A MODEST gain was clocked up by the FTSE 100 index yesterday as US Federal Reserve chairman Ben Bernanke predicted a weak recovery for the world's largest economy.

London's benchmark index struggled for direction early on but finished 27.8 points ahead at 5,342.9 as the Fed boss gave no hint of an imminent rise in interest rates.

US markets also rose in early trading despite a surprise fall in home sales during January. A raft of major results due today and tomorrow – as well as revised UK output figures – will be the main factor in deciding where the Footsie finishes the week.

The pound gained only slightly to stand at $1.54 against a weakening dollar on Bernanke's comments, although sterling fell below 1.14.

Colin McLean, managing director at Scottish Value Management, said: "People are still nervous about financials, and the Greek and European solution.

"The key characteristic in the market is low volumes."

Most banks were on the front foot as the finance sector prepares for annual results from the part-nationalised pair of Royal Bank of Scotland and Lloyds Banking Group.

RBS, which reports figures this morning, was 0.1p up at 36.1p, while Lloyds, which reports tomorrow, gained 1.8p to close at 53.5p. HSBC – the subject of speculation that it may scrap a pay rise for its chief executive – lifted 17.2p to 717.8p.

The strongest top-flight riser was cruise giant Carnival, which rose 83p to end the day at 2,429p after citing strong demand for 2010 departures and plans for price hikes.

The biggest fall was experienced by Wolseley, which slipped 51p to 1,579p as the builders' merchant gave up some of the gains seen on Tuesday after its surprise profits upgrade.

Wolseley's decline also reflected cautious comments from rival Travis Perkins, which fell 4 per cent as it warned there was no clear indication when its markets might return to growth.

Travis Perkins underlined this by reporting a 2.7 per cent drop in like-for-like sales for the first seven weeks of the year, following on from an 11 per cent decline in full-year profits. Travis shares were down 40.5p at 710p.

Housebuilder Barratt Developments also failed to shine after posting half-year results. While the company's figures were in line with expectations and included margin improvement, Investec Securities noted management had reduced guidance on volumes for the full year.

Among the other housebuilders, Persimmon dropped 16.5p to 393p, Bovis Homes eased 10.8p to 368.9p and Taylor Wimpey declined 1.15p to 36.4p.

Price comparison firm Moneysupermarket moved in the opposite direction, rising 2.5p to close at 72p as it posted a 26 per cent fall in full-year earnings but said it remained confident about prospects this year.

Admiral – which owns Confused.com – benefited from its rival's comments as shares in the FTSE 100 listed company rose 11p to 1,210p.

Edinburgh-based oil and gas explorer Melrose Resources climbed 13p or 4.3 per cent at 315p after publishing record production figures, which chief executive David Thomas attributed to the "fast-track development" of its Egyptian assets.

Numis analyst Sanjeev Bahl maintained his "add" recommendation on the company following the "positive" operational update, adding: "We view Melrose as lower risk than its small-to-mid-cap exploration and production peers due to the company's relatively low commodity price sensitivity."

New kid on the block Scotgold Resources ended its first day on Aim up 1.6p at 6.5p.