Wall Street rise provides relief for BP

STRONG gains on Wall Street helped limit losses for under-pressure BP yesterday as the wider FTSE 100 index also pulled back from early heavy falls.

A better-than-expected rise in pending US home sales boosted investor optimism over the world's biggest economy, helping the Dow Jones Industrial Average rise more than 1.2 per cent in early trading.

The rise saw the Footsie narrow earlier losses of more than 60 points to close 11.98 points lower at 5,151.32.

BP had spent most of the day deep in the red once more after news that US authorities had launched a criminal investigation into the Gulf of Mexico disaster, which came after a 13 per cent plunge on Tuesday.

But the stock, which accounts for 7 per cent of the FTSE 100, benefited from the late session turnaround, closing down 0.3p at 429.8p.

Sterling also remained firm, hitting 1.20, while the embattled single currency stayed near four-year lows against the dollar, holding steady at $1.22.

Prudential remained in the spotlight after the insurer officially called off its 24 billion takeover pursuit of AIG's Asian arm AIA.

The move will leave the company with a 450 million bill and the prospect of losing its chief executive Tidjane Thiam after he staked his reputation on the deal. Pru shares were 14.5p lower at 561p.

Banks joined the insurer on the fallers board after Lloyds Banking Group and Royal Bank of Scotland were both downgraded by JPMorgan, with RBS compounding matters by announcing 500 job cuts as part of further restructuring.

RBS slipped 1.7p to 45.1p and Lloyds fell 1.5p to 55.9p.

Among the risers, more defensive stocks were in vogue as investors lost appetite for risk. Imperial Tobacco – which makes cigarette brands including Lambert & Butler – was a prominent riser, up 52p to 1,892p.

Big pharmaceutical stocks were also doing well after a broker upgrade for GlaxoSmithKline, which rose 23p or 2 per cent to 1,181.5p. Peers Shire and AstraZeneca added 39p to 1,446p and 38.5p to 2,943p.

Northumbrian Water rose 2 per cent after full-year pre-tax profits increased to 170m and it assured markets over its funding position. Shares gained 5.7p to 284.1p.

But the latest figures showing subdued mortgage lending during April – with just a 2 per cent increase in home loans – failed to give much impetus to housebuilding stocks. Taylor Wimpey dropped 0.4p to 33.2p.

Elsewhere, shares in Topps Tiles were lower after it said like-for-like sales fell 4.3 per cent in the seven weeks since the start of April. With half-year profits also dropping 10 per cent to 7.8m, shares were 3.3p lower at 46.3p.

Among the Scottish stocks, shares in debt manager Invocas lost more than half their value – closing down 8.25p at 6.75p after the company unveiled plans to leave Aim.

ProStrakan, the Galashiels-based pharmaceuticals firm, closed down 2p at 73p after the US Food & Drug Administration extended a review of its cancer pain relief drug by three months. But chief executive Wilson Totten said he saw the extension as a "positive sign of the review".