Shares surge on positive Greece vote

LONDON FTSE 100 CLOSE 5,855.95 +89.07

THE London market surged ahead yesterday as Greece's parliament voted in favour of an austerity package and allayed fears it will default on its debt.

The FTSE 100 had made large gains early on, in anticipation that the unpopular €28 billion (25bn) five-year package of spending cuts and tax hikes would be approved. It rallied higher still after the deal was backed by a majority of the 300-member Greek parliament, paving the way for a bailout from the European union and the International Monetary Fund.

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Will Hedden, sales trader at IG Index, said: "The Greek crisis is over - or so the markets would have us think. Equities were strong all day, even rallying back to close near the day's highs, after profit taking following the announcement that the Greek austerity vote was passed."

The benchmark Footsie index closed 89.07 points or 1.5 per cent higher at 5,855.95, while Wall Street's Dow Jones industrial average was also up in early trading. The euro retreated following the vote, falling against the pound to €1.11, while sterling also slipped against the dollar at $1.60.

The market shrugged off weak service industry figures, which showed activity in the UK's powerhouse sector during April posted its largest drop since January.

Mining stocks dominated the risers' board with copper giant Antofagasta up 62p at 1,365p. Vedanta Resources was ahead 60p at 2,032p and Xstrata gained 57.5p at 1,341p.

Retailers featured on a shortened fallers' board with the sector still smarting from the deepening crisis on the high street.

Marks & Spencer's decision to start its summer sale two weeks early also unsettled the sector, as traders took it as further evidence of how tough trading is at present. Shares in M&S fell 7.3p at 361.6p, while B&Q-parent Kingfisher lost 1.5p at 268.1p, and Next was off 3p at 2,273p.

Rolls-Royce added 21.5p to 634.5p after it announced a $1bn (620 million) order from Singapore Airlines for engines for 15 Airbus A330 aircraft.

Troubled telecoms group Cable & Wireless Worldwide rallied by 2.6p to 47.6p after Tuesday's shock profit warning and departure of chief executive Jim Marsh. There has been market talk of a possible bid given the company's problems, though broker Evolution was sceptical, saying it expects few bidders to be attracted given C&W's poor visibility, falling revenues and lack of cash-flow.

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As the market flourished on renewed optimism, rehashed bid talk also swirled around ITV, up 6.6 per cent to 72p. Some traders said there was talk of a bid of 110-120 pence per share.

Among the Scottish firms, bus and rail group Stagecoach added 5p at 255.2p after posting higher profits in its most recent financial year.The Perth-based transport firm said pre-tax profits grew 27.5 per cent to 205.7m in the year to 30 April, as revenues increased in all of its divisions.

Aberdeen-based consultancy SeaEnergy saw gains of nearly 7 per cent despite disclosing a 5.7m loss for last year. Shares hit 29p as it completed the sale of its renewables arm and outlined how it would invest nearly 30m of proceeds into its marine support services division.