London shares rally in late session

Shares in London rallied late in the session yesterday to close higher as investors took heart from lower US jobless figures and better housing data.

The FTSE 100 Index added 16.6 points to 5873.2 to claw back earlier losses as the US Labour Department said applications for unemployment benefits fell to a three-month low. Pending home sales also edged up 2.4 per cent in June.

The dollar strengthened to 1.633 versus the pound, though sterling made good gains against the euro at 1.14 after a disappointing Italian bond auction.

The Dow Jones Industrial Index added 0.5 per cent despite ahead of a possible vote today by US lawmakers over raising the country’s debt ceiling to prevent a default.

Utility giant Centrica sank near to the bottom of leading shares index after it revealed a 54 per cent plunge in profits at its residential arm British Gas.

Centrica shares lost two per cent or 7.3p to 313p as profits of £270 million at British Gas, compared to £585 million last year, contributed to a 19 per cent drop in group half-year profits to £1.3 billion.

The CBI’s distributive trades survey also revealed UK retail sales fell at their fastest pace in a year, with stores expecting a further deterioration in August.

High street giant Marks & Spencer was down 0.7p at 348.5p and Next was off 8p at 2408p.

Some upbeat results from blue-chip firms including BAE Systems, BT and Rolls-Royce also helped boost the mood.

BAE Systems set the pace with a gain of 6 per cent, or 14.3p to 306.8p, after it raised its half-year dividend by seven per cent in a sign of confidence in future prospects, even though interim profits were lower due to one-off charges.

Telecoms giant BT said first quarter profits lifted 20 per cent on the back of strong demand for broadband products. Shares cheered 7.2p to 197.9p.

Anglo-Dutch oil and gas giant Royal Dutch Shell improved 2.5p to 2275p after the latest bumper haul from the oil industry saw the firm’s second quarter profits surge 77 per cent to just under £5 billion.

Analysts said the results were in line with forecasts.

Outside the top flight, transport group National Express saw its shares climb four per cent after a strong set of half-year results.

The group, which runs bus, coach and rail services, posted a 26 per cent hike in pre-tax profits to £95.5 million in the six months to June 30 after a 6 per cent increase in revenues to £1.1 billion. Shares were up 11p at 261.3p.

Blacks Leisure shares came under pressure – falling 11 per cent or 1.5p to 11.8p – after reports last week suggesting Sports Direct International was looking to beef up its outdoor wear offering continued to put off investors.

The biggest Footsie risers were BAE Systems up 14.3p at 306.8p, Shire ahead 86p at 2136p, Lloyds Banking up 1.8p at 45p and Inmarsat ahead 20p at 537p.

The biggest Footsie fallers were Carnival down 66p at 2161p, Lonmin off 37p at 1285p, Hargreaves Lansdown down 13.5p at 578p and Centrica off 7.3p at 313p.