Positive US data propels FTSE back into the black

The FTSE 100 Index added 31.23 to 5617.84, helped by strong gains in

the US after a fall in initial unemployment claims last week.

The Dow Jones Industrial Average added 1 per cent in early trading, building on gains seen on Wednesday after assurances on interest rates from the US Federal Reserve.

The number of US workers submitting new claims for unemployment benefits fell slightly last week, implying only a gradual labour market improvement even as the economic recovery broadens out.

While the data did not change views employers probably added to payrolls this month, analysts were disappointed with how slowly claims were declining and said it showed companies were reluctant to embark on a hiring spree.

Initial claims for state unemployment benefits fell 11,000 to a seasonally adjusted 448,000, the Labor Department said. That was slightly below market expectations claims would drop to 445,000.

Meanwhile, European officials said they were confident of agreeing a bailout for Greece in the days ahead, easing some of the pressure on markets after the Standard & Poor's downgrade for Spain late on Wednesday.

In London, positive corporate news also put shares on the front foot after a turbulent week, while the pound bounced back to near 1.53 following heavy falls against the dollar on Wednesday. Sterling stood at 1.15 against the euro.

BSkyB cheered almost 5 per cent, or 29p to stand at 625p as its results way exceeded market expectations. The broadcaster managed to add 62,000 net customers in the three months to end-March, taking its total customer base to 9.77 million.

Consumer goods giant Unilever also posted forecast-beating first quarter sales figures, helping shares in the Dove soap to Lipton Ice firm up 64p to 1980p.

Standard Life, meanwhile, had an 81/2p gain to 202p after favourable broker comment. Panmure Gordon upped its rating to 'buy' after a much better than expected performance in the first three months of 2010. InterContinental Hotels was also a strong gainer after Lazard started coverage with a 'buy', helping shares 65p ahead to stand at 1136p.

In other sectors, Smirnoff-to-Guinness drinks giant Diageo added 28p to 1132p after French rival Pernod Ricard upped its sales guidance for the year.

The leading top-flight faller was oil giant BP, which shed more than 6 per cent, or 403/4p to 5841/4p after it said the impact of last week's oil spill in the Gulf of Mexico was far worse than was first estimated.

Whitbread was also down despite a 60 per cent surge in annual earnings at the Costa coffee chain offsetting "the most challenging hotel and restaurant trading conditions for a generation". The group, which owns Premier Inn hotels and restaurants including Brewers Fayre, posted underlying pre-tax profits of 239.1m for the year to March 4, up 6.6 per cent on a year earlier. Shares were 38p lower to stand at 1545p.

Music and games retailer HMV was also on the back foot in the FTSE 250, losing more than 8 per cent or 63/4p to 723/8p after investors gave its latest trading update the thumbs down.

Like-for-like sales in the UK and Ireland were down 13.2 per cent in the 16 weeks to April 24 as the firm blamed January's snow, a depressed games market and fewer promotions.

The biggest Footsie risers were Intercontinental Hotels Group, BSkyB, Eurasian Natural Resources up 55p to 1256p, and Standard Life. The biggest faller was BP.