London advances despite oil heavyweight's decline

The company's shares were down 4 per cent as its refining business was hit by "extremely weak" trading conditions in the final months of 2009 despite a 4 per cent rise in production.

The heavyweight's 33 per cent rise in profits to 3.45 billion US

dollars (2.16bn) came as a disappointment, but the wider market shook off earlier caution to close 35.90 points ahead at 5283.31.

Late session trading was boosted by a strong start on Wall Street, up more than 60 points after better news from the US housing industry, including an increase in the number of people in contracts to buy homes.

The National Association of Realtors' Pending Home Sales Index, based on contracts signed in December, rose 1.0 per cent to 96.6 after falling sharply in November when a boost from the initial tax credit for first-time buyers ebbed.

Analysts had forecast pending home sales, which lead existing home sales by one to two months, would rise 1 per cent. Compared to December 2008, the index was up 10.9 per cent.

The tax credit, which had been scheduled to end in November, was

expanded and extended until June.

There was little change for sterling yesterday as the pound lifted by a marginal 0.1 per cent against the dollar to 1.597 and largely held firm at 1.14 euros.

With BP under pressure after its fourth quarter figures – down 225/8p to 572p – attention turned to Royal Dutch Shell and the company's own full-year results on Thursday.

The Anglo-Dutch firm will be under increased pressure to prove that its restructuring efforts are paying off after a period of under-performance.

But shares in Royal Dutch Shell were 27p higher at 17171/2p as crude prices rose to 75 dollars a barrel amid optimism inspired by Monday's upbeat manufacturing data.

Elsewhere in the top flight, firms in the utility sector surrendered gains seen on Monday after speculation of a takeover bid for Northumbrian Water.

United Utilities fell 9p to 5421/2p and Severn Trent dipped 22p to

stand at 1148p.

Cable & Wireless made progress, however, after the telecoms firm confirmed plans for a March split of its two business divisions and revealed a dividend policy in line with market hopes.

With the company also providing a positive update on trading, shares were 31/8p higher at 1463/8p, a gain of more than 2 per cent.

Miners dominated the risers' board as a weakened dollar pushed up metal prices.

Eurasian Natural Resources was the Footsie's top riser, adding 43p to 977p.

Outside the top flight, shares in Dairy Crest were 1 per cent higher after it said profits for the nine months to December 31 were slightly ahead of expectations.

It hailed a continued strong performance by key brands such as Clover and outlined plans for 75m investment in its dairy facilities. Shares added 33/4p to 3411/2p.

Waste disposal group Shanks found itself moving in the opposite direction after it said annual results will be slightly below previous expectations due to the impact of the recent adverse weather conditions.

The company, which remains the subject of a takeover approach from private equity firm Carlyle, fell 27/8p to 124p.

The biggest Footsie risers were Eurasian Natural Resources, Amec up 34p to 7851/2p, Cairn Energy ahead 131/2p to 3391/4p and Kazakhmys up 50p to 1331p.

The biggest Footsie fallers of the day were BP, Severn Trent, and Legal & General declining 13/8p to stand at 771/2p.