London Report: Rolls rally lifts market closer to record high

Arally by aircraft engine-maker Rolls-Royce and the US Federal Reserve’s reassurance over monetary policy yesterday pushed the FTSE 100 up to trade just below a record high.

The London market ended the day 0.4 per cent higher at 6,808.11 points, not far from a record 6,950.60 set in 1999.

Rolls-Royce surged 8.1 per cent to 1,090p, to add the most points to the FTSE, as analysts welcomed its £1bn share buy-back plan.

The company said it was on track to return to earnings growth next year, reassuring investors whose confidence was shaken by a cut in profit guidance in February and an Airbus engine order cancellation this month. The stock had lost 17 per cent of its value over the past six months.

BT rose 7.5p to 392.5p after regulator Ofcom rejected a complaint from TalkTalk Telecom, down 1.9p at 321p, that the company was abusing its dominant position in broadband pricing.

But Vodafone fell 3.25p to 194.85p as Bank of America Merrill Lynch downgraded the mobile phone group from buy to neutral.

Pharmaceutical group Shire slipped 47p to £37.38 following sharp rises in recent days on talk it could be a takeover target for US rivals such as Bristol-Myers Squibb, Amgen, Abbvie, Gilead and Biogen Idec.

Among the mid-caps, hedge fund group Man added 5.95p to 105.1p after agreeing to pay an initial $219m for US peer Numeric Holdings. Another payment of up to $275m will be made after five years.

Software group Micro Focus International rose 25.5p to 860p after reporting a better than expected 2.4 per cent drop in profits to £86.8m.

Mining stocks were in demand, too, as the return to risk lifted the sector.

BHP Billiton rose two per cent to 1,911p. Antofagasta gained 1.9 per cent at 772p, while Anglo American is 1.5 per cent stronger at 1,459p.

And Velocys, the gas-to-liquids technology business, added 9.5p to 217.5p following news that Ervington Investments, controlled by Chelsea-owner Roman Abramovich, had bought around 1.3m shares to take its stake to 9m or 7.71 per cent.