Footsie continues winning run in lacklustre session

The blue-chip index finished 20.10 points ahead at 5237.92, despite early wobbles on Wall Street after a sudden fall in US home construction during May.

As the US government's tax incentives for homebuyers expired, new home building dropped 10 per cent to a seasonally adjusted annual rate of 593,000 units, the lowest level since December, the Commerce Department said.

Industrial production, in contrast, surged 1.2 per cent. Some of the rise was due to a spike in utilities as rising temperatures prompted many Americans to turn on their air conditioners. But manufacturing output was firm as well, climbing 0.9 per cent, according to the Federal Reserve report.

Despite that performance, prices at the wholesale level retreated in May. The Labor Department's Producer Price Index eased 0.3 per cent as gasoline costs tumbled.

Investors had little to get their teeth into in a slow day for corporate news, although many financials and energy stocks advanced as markets showed some increase in risk appetite.

The pound also rose to its highest level for more than a month against the dollar – passing 1.48 – and traded at around 1.20 against the euro.

Joshua Raymond, market strategist at City Index, said: "You get the feeling that there are a lot of investors who are simply sitting on the sidelines."

"Are they simply watching the World Cup or are they concerned about how financial markets may play out over the rest of the month? My assumption is both."

Royal Dutch Shell added 361/2p to 17571/2p and BG Group rose 23p to 1136p, although BP shares were down 5p to 337p as the firm faced a meeting with President Obama in Washington.

It is possible that the summit could result in BP placing up to 20 billion US dollars (13.5bn) into a special account to deal with damage claims from the Gulf of Mexico spill.

In the financial sector, Royal Bank of Scotland rose 1p to 451/8p, while Prudential added 10p to 570p after Nomura brokers lifted their target price on the stock. A slow day was dominated by supermarket Sainsbury's, which said that like-for-like sales excluding petrol eased to 1.1 per cent in the 12 weeks to June 12, although the firm reported a "good start"to the new year. The performance had been expected due to falling food price inflation. The figures – which include higher VAT – match the 1.1 per cent sales growth reported by market leader Tesco on Tuesday as firms struggle with comparisons against a period of rising food prices last year.

Shares rose 23/4p to 3271/4p and rival Tesco lifted 11/2p to 396p.

On the fallers' board, shares in Severn Trent and United Utilities were down 54p to 1249p and 21p to 5381/2p respectively as the pair turned ex-dividend, meaning that shareholders are not entitled to the latest share payout.

Mobile satellite firm Inmarsat was again a leading Footsie casualty after a broker downgrade on Tuesday. Shares declined by 291/2p to 750p.

Outside the top flight, shares in engineering and outsourcing firm Mouchel fell by 53/4p to 1511/4p – a drop of 4 per cent – after it predicted a "difficult" short-term outlook due to the squeeze on public spending.

Plastics manufacturing firm Filtrona led the FTSE 250 Index risers' board after it said trading in the first half of its financial year was "materially" ahead of its expectations. Shares jumped 263/8p to 2221/2p.

The biggest Footsie risers were Shire up 35p to 1462p, RBS, Old Mutual up 23/8p to 1151/4p and Shell. The biggest fallers were Severn Trent, Inmarsat and United Utilities.