FTSE gains as EU leaders pledge support to Greece

Sentiment improved slightly after Germany and France offered moral support to the stricken economy.

The FTSE 100 Index closed up 29.49 points at 5161.48 at the end of a volatile day dominated by the tense EU summit.

Wall Street also recovered its poise after falling heavily on opening. The Dow Jones Industrial Average was up 0.5 per cent in the wake of much better than expected US jobless claims and the united front shown by Europe.

But EU nations offered no firm financial support for Greece and leaders deferred the issue until March, saying they would seek advice from the International Monetary Fund for an assessment of Greece's situation.

The euro remained under pressure against the US dollar and the pound, falling as much as 1 per cent against the greenback before recovering slightly.

The pound was up 1 per cent against the single currency at 1.14 euros and also climbed to 1.56 dollars.

The number of US workers filing new claims for unemployment benefits tumbled last week, welcome news for a White House that is predicting an average of 95,000 jobs a month will be created this year.

Initial applications for state unemployment benefits drop-ped by 43,000 to a seasonally adjusted 440,000 last week, down from a revised 483,000 in the prior week, the Labor Department said yesterday. Analysts had expected claims to slip to just 465,000.

In London BT was the biggest faller – slumping almost 9 per cent, or 111/2p, to 1197/8p – after it revealed the Pensions Regulator still had "substantial concerns" about the company's plans for tackling its 9bn pensions black hole.

The falls came despite news that the telecoms firm had reached

agreement with trustees about addressing the pensions shortfall over 17 years. BT's third quarter results were also slightly ahead of expectations.

Mining firms were in favour after Rio Tinto recorded a 33 per cent increase in net profit for 2009 due to record sales of iron ore and an increase in copper and gold production. Rio shares jumped 761/2p to 3216p, a gain of 2 per cent, while BHP Billiton lifted 45p to 19011/2p and Antofagasta added 241/2p to close at 871p.

The top spot in the FTSE 100 Index was reserved for engine giant Rolls-Royce, which defied earlier City expectations for a drop in underlying profits by revealing a 4 per cent rise instead.

Announcing a record order book of 58.3bn at the end of 2009, chief executive Sir John Rose said the company's performance in 2010 should match last year in terms of revenues and profits.

Shares responded to the guidance by rising 6 per cent, or 313/4p to

stand at 5201/2p.

As well as the sharp drop for BT, Diageo shares fell after the drinks company reported slightly lower first half profits as recession-hit drinkers switched away from premium brands towards cheaper lines.

Shares in the Guinness-to-Smirnoff brewer were 7p lower at 1018p.

Banks were also lower as Lloyds dropped 17/8p to 481/8p, Barclays fell 91/2p to 2683/8p and Royal Bank of Scotland slipped 3/4p to 317/8p.

Outside the top flight, shares in Sports Direct International jumped 8 per cent after it raised earnings guidance for the year to April. With Competition Commission officials also clearing its acquisition of 31 JJB stores, shares rose 7.7p to 104.7p.