FTSE close: London shares hit 2½-year high

By Adrian Lowery
Updated: 12:47 EDT, 14 December 2010

17.00 (closed at 16.30): The FTSE 100 rose to its highest level for two-and-a-half-years today. The index closed up 30.5 points to 5891.2, its highest point since June 2008.

Most of the heavy lifting came from market giant BP, 14.8p at 473.1p, due to market twittering of a bid for BP from Shell. The stock was also helped by the sale of oil fields in Pakistan to United Energy Group for $775m.

BP has now sold more than $20bn of assets since the Gulf of Mexico oil spill.

A bullish oil sector note from Credit Suisse also lent support.

Positive news about shoppers in the US also helped the mood in London. The Commerce Department said retail sales rose 0.8% last month, beating expectations that they would rise by 0.5%.

Wall Street's Dow Jones Industrial Average was up 0.6% following the news, which also strengthened the dollar. The pound fell back against the euro to €1.18 following strong industrial data from Germany.

The price of gold was up slightly at $1,397.80 an ounce from $1,396.40 - but it had been as high as $1,405 this morning. The pound had weakened to $1.5787 from $1.5869 at the previous close.

'It's been a pretty slow session for UK markets though it has been mainly positive, largely as a result of the oil and gas sector which has kept the index in the blue for most of the day,' said Michael Hewson, an analyst at CMC Markets.

The FTSE 250 was also in bullish mood, hitting a fresh three-year high at 11,380.

The top FTSE 100 risers were BP up 14.8p at 473.1p, Serco Group ahead 12p at 577.5p, BAE Systems up 7p at 337.5p and AstraZeneca up 55.5p at 3107p. The top Footsie fallers were Whitbread down 50p at 1740p, Pearson off 18p at 998p, Admiral down 21p at 1535p and Royal Bank of Scotland down 0.5p at 41.3p.

16.00:

An upbeat report on retail sales in the US boosted investor confidence in the global economic recovery and lifted world markets today.

Wall Street's Dow Jones Industrial Average was up 1% after the US Commerce Department reported that retail sales rose for the fifth straight month in November.

The positive sentiment filtered over to London where the FTSE 100 Index added 20 points to 5,880.5. Elsewhere, the DAX in Germany was up 1.1% and France's CAC-40 was 2.7% ahead.

14.00:

Oil giant BP is the biggest blue-chip gainer, climbing 2% or 9.85p to 468.25p after it entered into an agreement to sell almost all of its exploration and production assets in Pakistan to United Energy Group.

Investors are also reassured by an update from Wickes owner Travis Perkins, which lifted 30p to 1002p after exceeding the forecasts of broker Seymour Pierce with a 6.5% increase in group revenues.

Meanwhile, gambling firm Betfair continued its poor run of form on the stock market after it revealed revenues would be hit by the big freeze.

In its first set of results as a public-listed company, Betfair said cancelled race meetings in the current quarter would moderate growth rates, despite a strong overall trend led by its core sport of football.

The firm's shares fell by 11% - down 138p at 1043p - and have now declined by around 34% since it floated on the stock market in October.

12.20: We have an update on Carpetright, which has seen its shares shed 35p to 761p despite Bill Gates' apparent faith in it. News emerged late on Monday that the billionaire founder of Microsoft had increased his stake in the retailer to 6%.

Shares in leisure group Whitbread are still struggling as investors remain wary about its prospects in the fourth quarter due to the recent snow and cautious consumers. The stock is down 55p at 1,735p.

The Footsie was trading up 4.07 points at 5,864.82 shortly after midday.

10.00:

A lacklustre session for the London market today, with traders reluctant to make significant moves until the latest Federal Reserve Open Market Committee announcement from the US.

The FTSE 100 index climbed to its highest level in more than a month last night but paused for breath today, up 3.9 points at 5,864.7.

Analysts expect the Fed to remain in a holding pattern as officials today evaluate the recent launch of a bond-buying programme and the health of the US economic recovery after a spate of encouraging data.

Any signs that there would be a reduction in the extent of quantitative easing, though this is unexpected, could cause a setback for equities.

'Any indication that there is going to be more caution from the Fed could send a little wave through equity markets, but I think this is unlikely and everybody's hoping there will be no shocks between now and next week,' said Giles Watts, head of equities at City Index.

In London, miners were generally weaker, but Eurasian Natural Resources was the top FTSE 100 gainer, up 5p to 984p after UBS upgraded it to 'buy' from 'neutral'.

And Xstrata added after also being raised by the broker to 'buy' from 'neutral'.

Whitbread topped the FTSE 100 fallers' board after another strong performance from coffee shop chain Costa was offset by a deterioration in sales trends at the company's Beefeater and Brewers Fayre restaurants business.

Shares fell 51p to 1739p, despite the view in the City that the leisure group was on track to meet full-year profit forecasts.

TUI Travel fell 3.2p to 234.8p despite its German parent company TUI AG reporting strong full-year results.

In the FTSE 250 index, flooring firm Carpetright fell 24p to 772p after it reported a 28% drop in half-year profits to £10m and remained cautious about market conditions next year.

Rail and bus group Go-Ahead moved in the opposite direction, rising 24p to 1297p, after it said procurement savings in its rail business meant it was running marginally ahead of profit expectations.