Share index remains on a high

LONDON'S leading share index remained at 18-month highs yesterday despite a quieter session for stocks.

Investors paused for breath after the rally seen at the end of last week, but the top tier held above the 5,600 level – closing up 7 points at 5,606.7. It was also a more stable day for America's Dow Jones Industrial Average in the absence of any major economic or corporate news.

The Dow clung to its opening mark after last Friday's 1 per cent advance following better-than-expected US unemployment figures and a wave of mergers and acquisition news.

There was more takeover news yesterday, again from embattled US insurer AIG as it struck a deal to sell off its major foreign divisions to MetLife for $15.5 billion (10.3bn).

But with few other announcements, the market was setting its sights on a raft of economic reports toward the end of the week, including the latest retail sales and consumer sentiment reports.

Angus Campbell, head of sales at Capital Spreads, said: "On the whole, you tend to find that if there is any absence of economic data, the market will usually trend in its current direction and that's what we're seeing today.

"People are relatively optimistic after the non-farm payrolls on Friday. There's no reason to suddenly change from a bullish view and bullish sentiment over the weekend when there was very little news flow."

Meanwhile the pound fell to 1.50 against the dollar and 1.11 against the euro as economic and political uncertainty continued to impact on sterling – although the currency has so far staved off the full-blown collapse threatened early last week.

One of the top tier's biggest risers was oil firm Petrofac, which gained 4 per cent after a 33 per cent increase in net profits for 2009 was well received. Shares rose 44p to 1,116p.

Insurer Prudential eased back from early session advances after it said it hedged the dollar cost of the deal to protect itself from a falling pound.

The firm, which was on the back foot last week after unveiling a mega-deal to buy stricken AIG's Asian arm, closed 2p lower at 518p as it also said it planned to launch on the Hong Kong stock exchange before launching a rights issue to fund the takeover – a move that would allow it to widen the cash-call to Asian investors. Fellow insurer Legal & General added 2.05p to 78.3p.

The star of the FTSE 250 was Edinburgh-based Forth Ports – the UK's biggest listed ports operator – which saw shares surge more than 25 per cent or 286p to 1,403p after the firm revealed a 612 million takeover approach by a group of shareholders.

Forth rejected an improved 1,340p-a-share proposal from the consortium and said the price "fell far short" of the value of the business.

Also in the second tier, Bovis Homes returned to profit with a 4.8m surplus for 2009. The result saw shares lift 7.4p to 388.7p, or 1.9 per cent.

Shares in Perth-based Stagecoach reversed by 0.8p to close at 180.1p despite the transport giant saying it had spotted a light at the end of the recessionary tunnel, with rail revenues improving in line with a slight upturn in the economy.

Meanwhile, Aberdeen-based rival FirstGroup was down 6.8p or 1.8 per cent at 362.2p.

Oil hit an eight-week high above $82 a barrel, near its highest point this year so far, buoyed by a weaker dollar and more positive sentiment about the economic outlook.

Bowleven, the Edinburgh-based oil and gas explorer, surfed the wave, rising 4.75p or 4 per cent to 122.75p, but Cairn Energy slipped slightly, ending the day down 0.3p at 365.7p.