Financial sector gains push London back into the black

The blue-chip benchmark added 44.80 points to 5307.34 – a gain of 0.9 per cent – although it finished off session highs as early momentum on Wall Street from strong corporate results and economic news faded.

Heavyweight mining stocks – hit by a late sell-off on Monday – underpinned the advance while hedge fund giant Man Group also returned to favour after a nine per cent slide in the previous session.

Dealing rooms managed to shrug off a spike in UK inflation to a 17-month high, with the pound largely unmoved at 1.44 against the dollar and at 1.16 against the euro.

The Bank of England said inflation was likely to be back at its two per cent target within a year.

Hedge fund Man Group was the star of the show as traders decided that its nine per cent fall in the wake of Monday's deal for rival GLG looked overdone.

Earlier worries over the steep $1.6bn price (1.1bn) were put aside as Man gained 18.4p to 220.3p – a rise of nine per cent echoing Monday's decline.

Mobile phone giant Vodafone made some early progress after operating profits of 11.9bn bettered previous guidance, helped by strong trading in emerging markets such as Africa and India.

The firm also reported an improved revenues trend in the UK, although the company's shares lost some of their momentum to stand 0.35p lower at 136p amid worries over stiff competition in India.

Miners largely rose as earlier jitters over the potential impact of an economic slowdown in China faded away. The exception was heavy faller Randgold Resources, down 55p to 6050p as gold prices eased.

Insurer Prudential also finished lower after Monday's record rights issue to fund its Asian expansion plans. Shares slipped 41/2p to 530p. British Land's return to profit and positive outlook for the year however pushed its shares 18.7p up to 452p and heralded a decent

session for the property sector.

The firm expects its retail assets – which include St Stephen's shopping centre in Hull and a 50 per cent share in Sheffield's Meadowhall – to be "relatively resilient" despite downward pressure on rents across the sector.

The group expects to benefit from higher rents over the next year in the London office market. Panmure Gordon analyst Mark Hughes said the company had produced a "solid set of results". He added: "British Land has the flexibility and firepower to take advantage of market

conditions and make property acquisitions."

Land Securities and Segro both made the risers board, adding 15p to

635p and 7.7p to 288.3p respectively.

Investors were also tracking British Airways shares after it won a court ruling against a series of five-day strikes.

Shares finished 0.1p off at 200.4p after gains earlier. Travellers will still face some disruption this week as the ruling came too late to reinstate schedules.

In the FTSE 250 Index, shares in Yell Group slumped 22 per cent after it said chief executive John Condron and finance director John Davis were both planning to leave the business.

The company reported an improved revenues trend in full-year results, but this was not enough to prevent shares from falling 10.35p to 36.76p.

The biggest Footsie risers were Man Group up 18.4p to 220.3p, Icap ahead 18.4p to 389.6p, British Land up 18.7p to 452p, and London Stock Exchange ahead 221/2p to 672p.

The biggest fallers were Cable & Wireless Worldwide down 0.85p at 83p, Randgold Resources off 55p at 6050p, Autonomy down 16p at 1769p and Prudential off 41/2p at 530p.