Positive BT results propel London market into black

The better-than-expected results ensured the City overcame a lacklustre start to trading in New York to close 50.28 points higher at 5433.73.

The rally meant the Footsie has now added more than 300 points since Friday night, when it endured its worst week since March 2009, falling 7.6 per cent.

In contrast, the pound suffered another bleak session after the UK's goods trade deficit widened by more than expected. The pound stood at 1.46 against the US dollar, having been trading at near 1.50 following the formation of a new coalition government on Tuesday. Sterling was 1.16 against the euro.

In the US, the number of workers filing for jobless benefits fell only slightly last week, highlighting the challenges facing the labour market, while import prices pointed to tame inflation, according to government data.

Initial claims for state unemployment benefits slipped 4,000 to a seasonally adjusted 444,000, the Labor Department said, though the number was still slightly above the 440,000 expected by analysts. The prior week's figure was revised up to 448,000.

In a second report, the department said import prices increased 0.9 per cent last month on higher petroleum costs after rising 0.5 per cent in March. However, excluding the volatile petroleum category, import prices rose just modestly.

BT topped the Footsie risers' board with an 11 per cent gain – 131/8p to 1335/8p – after it reversed last year's loss with a full-year profit of 1bn and said it expected a return to revenues growth in the 2012/13 financial year.

Chief executive Ian Livingston also set out plans for a major investment programme, including an extra 1bn on superfast broadband in the UK. It is a far cry from a year ago when shares slumped to a record low of under 100p due to contract over-runs at its IT network services division.

Supermarket chain Sainsbury's also exceeded hopes after it posted annual profits of 610m, up 17 per cent on a year earlier and 10m better than forecast in the City. Shares responded with a 101/2p rise to 3381/2p, although analysts were split over the group's prospects amid worries about slowing sales and mounting pressure on shoppers.

Thomas Cook was another firm to receive a results day boost, with shares up 4p to 2361/8p after the tour operator narrowed half-year losses and said holidaymakers were reluctant to give up their summer break. It estimated the impact of April's volcano cloud disruption will be around 70m.

Outside the top flight, Currys owner DSG International continued to impress after strong growth in UK electricals and the Nordic countries ensured like-for-like sales rose 6 per cent in the 28 weeks to May 1.

DSG, which said its transformation plans remained on track, rose 6 per cent, or 13/4p to 30p.

There was a heavy fall for Trinity Mirror shares after the newspaper publisher said trading remained volatile in the 17 weeks to May 2.

It still expects a satisfactory performance in 2010 but said advertisers had been reluctant to spend in the run-up to the general election. Shares dropped 12 per cent, or 171/4p to 1211/2p.

Shares in nightclub operator Luminar lost a third of their value after the company racked up huge losses for the year to February 25. It fell 13p to 27p.

The biggest Footsie risers were BT Group, 3i Group ahead 201/2p to 2883/4p, Eurasian Natural Resources up 42p to 1137p and Fresnillo ahead 32p to 894p.

The biggest faller was Cobham down 5p to 2471/4p.