London keeps hold of gains despite early Wall St losses

The top flight closed the day 20.15 points up at 5131.99 although an uncertain start to trading on Wall Street took the gloss off even bigger gains earlier.

A larger than expected US trade deficit in December pushed the Dow Jones Industrial Average into the red, while US Federal Reserve chairman Ben Bernanke also dampened the mood after signalling an end to emergency support measures for the economy.

Bernanke said exit steps include the likely widening, soon, of the gap between the discount rate the Fed charges banks for emergency loans and the overnight interbank federal funds rate, its main policy tool. The Fed pulled the discount rate closer to the fed funds rate during the severe credit crunch to encourage banks to use it to obtain short-term funding.

US stock indexes read the Fed chairman's comments as hinting at a rise in interest rates and added to losses, while the dollar gained against the dollar and the yen.

In London, stocks were improving amid speculation that eurozone countries will come up with a plan to help Greece as it battles to head off a potential sovereign default.

Reassuring comments from Bank of England Governor Mervyn King denying the UK was next in line for a sovereign default also helped give blue chips a boost.

But Mr King added it was too early to call the end of quantitative easing efforts as the Bank trimmed its economic recovery forecasts and signalled that interest rates could remain at record lows of 0.5 per cent until the end of the year.

This left the pound below 1.56 against the dollar and trading at around 1.13 against the single currency as markets await the outcome of today's key meeting.

Financial stocks enjoyed a decent session with insurer Aviva one of the top risers amid vague bid rumours.

The stock added 171/8p to 3615/8p, or 5 per cent, while Lloyds Banking Group cheered 13/4p to 50p and Legal & General rose 2p to 721/4p.

Reckitt Benckiser was more than 1 per cent higher after the household products group posted fourth quarter and full-year figures which were in line with expectations. The company, which also revealed it expected revenues growth of 5 per cent this year, saw shares rise 53p to close the day at 3187p.

Among the few Footsie fallers Royal Dutch Shell was down more than 1 per cent, or 25p, to 1652p, as the stock turned ex-dividend, meaning that new investors will not take part in the next shareholder payout.

Outside the top flight, Trinity Mirror shares were 5 per cent higher after Tuesday's deal to buy regional newspapers belonging to Guardian Media Group. Shares rose 61/4p to 1413/4p.

In the same sector, Daily Mail & General Trust slipped 31/2p to 4391/8p despite news of a January rise in advertising revenues at its national newspapers.

Elsewhere, snack food firm Glisten shot up by 54 per cent, lifting 47p to stand at 1331/2p, after Benecol maker, Finnish food firm Raisio, announced a deal to buy the group.

Management will hold on to a 15 per cent stake under the takeover, which values Leeds-based Glisten at around 19.8m.

The biggest Footsie risers were Icap up 321/4p to 337p, Aviva, Old Mutual up 4p to 1011/4p and Aggreko which closed the day 35p higher at 930p.

The biggest Footsie fallers were Autonomy down 88p to 1522p, Antofagasta off 181/2p to 8461/2p, GlaxoSmithKline down 221/2p to 1196p and BHP Billiton which finished the session 29p worse off at 18561/2.