Transport groups drive Footsie rise

SHARES in Scottish transport giants FirstGroup and Stagecoach moved up a gear yesterday after the Chancellor's comprehensive spending review attacked rail subsidies.

But the cuts were not as deep as analysts had feared and raised the possibility of fare increases for passengers.

Perth-based Stagecoach jumped by 9.4 per cent or 17.6p to 205.1p, while FirstGroup of Aberdeen was up 6.4 per cent or 24.2p to 401.5p.

A strong start to trading on Wall Street helped to revive the Footsie, which had been flat following the CSR. The FTSE 100 index ended the day up 25.04 points at 5,728.93.

Trading earlier in the session had been lacklustre, with the Bank of England's latest minutes also failing to provide direction.

The report offered few clues on quantitative easing as the bulk of the monetary policy committee continued their wait-and-see approach.

Sterling remained robust in the face of the CSR, up more than 1 per cent to $1.59, although it fell marginally to €1.14.

Stocks were helped by early gains on Wall Street, where the Dow Jones pulled back after plunging the previous session on concerns over growth in China sparked by its shock interest rate rise.

Mining stocks propped up the Footsie in London as they too recovered from the China rate blow.

The mood in the resources sector was helped by September production numbers from BHP Billiton after the mining giant maintained output across the bulk of its commodities.

Xstrata rose 42.5p at 1,291p, while the upbeat report from BHP meant its shares rose 53.5p to 2,192.5p.

BAE Systems fell more than 4 per cent as the stock turned ex-dividend - meaning new investors will not take part in the next shareholder payout - and as investors digested the impact of the UK government's defence spending review on shares in the sector.

With an order for BAE's Nimrod aircraft among the casualties, the blue-chip stock fell 14p to 349.9p following a decline of almost 2 per cent on Tuesday.

Banks were in the spotlight again as the Chancellor announced a step forward in introducing the 2.5 billion a year annual banking levy, with draft legislation due to be published today.

This followed a difficult session in the wake of China's rate hike and a broker downgrade on Lloyds Banking Group.

Royal Bank of Scotland was 1p lower at 46p, while Lloyds dropped 0.2p to 70.3p.

In corporate news, a cautious outlook statement from Sports Direct International offset any cheer from its forecast that first-half profits will be well ahead of last year.Shares were down 3.6p at 143.9p.

Haulage firm Stobart Group dropped 9 per cent or 13.5p to 143p after it made a slight downward revision to its full-year profit hopes due to the impact of Network Rail spending cuts at its rail maintenance operation.

Foods group Uniq was 13 per cent higher after it unveiled radical plans to transfer 90 per cent of the firm's equity to its pension scheme in a fresh attempt to resolve a mammoth funding deficit. Shares rose 0.9p to 7.8p.