Blue chips drive moderate FTSE gain

A strong run for firms reporting results this week helped London's blue-chips gain ground today although downbeat economic news from the US took the gloss off the day.

The FTSE 100 Index closed the session up 30.5 points at 6449.2 as it gave back some of its earlier gains after disappointing US manufacturing data took its toll on afternoon trading. Meanwhile the forthcoming May Day holidays mean trading volumes could be lower this week.

International Power led the Footsie advance after an upgrade from Lehman Brothers, which highlighted the group as its preferred stock in the UK electricity sector. The group lifted 14p to 440.25p.

Cable & Wireless gained more than 2% amid reports that the telecoms group could consider a break up of its business. The stock was 4.4p higher at 185.6p after Citigroup suggested that a separation of its UK and international operations looked like the most logical step for the firm as a turnaround at its UK division gathered pace.

Pubs group Punch Taverns was also on the front foot ahead of its annual results tomorrow, with analysts forecasting a strong set of figures from the firm. The stock was up 34p at 1304p.

It was joined on the risers board by retailer Next, which gained 46p to 2349p after Morgan Stanley upgraded its target price on the company. Elsewhere in the sector, Argos owner Home Retail Group was up 11.25p at 457.25p ahead of its results later in the week.

Meanwhile, Scottish & Newcastle led the Footsie fallers with a slide of more than 1%, or 8p to 617p, as it gave back some of its recent gains following a raft of takeover speculation.

InterContinental Hotels followed it down after Credit Suisse downgraded the stock citing concerns regarding the impact of the weaker US dollar on earnings. The group was 7p lower at 1216p.

In the FTSE 250 Index, fibres and plastics group Filtrona jumped more than 3%, or 9p to 290p, after it reported strong growth in the first quarter of the year.

Bodycote International moved in the opposite direction, down 9% after Friday's failure by Swiss firm Sulzer to see through its takeover interest. Bodycote was 29p lower at 296p.

Elsewhere, babycare retailer Mothercare surged 7%, or 27.75p, to 434p after it acquired the Early Learning Centre chain from Chelsea Store Holdings for £85 million. The purchase is widely regarded to be earnings enhancing for the retailer, which plans to add Early Learning concessions to its out of town stores.

Higher-than-expected results from internet gambling firm 888 Holdings saw the stock up 0.75p at 120.25p, while PartyGaming, which had been viewed as a potential merger partner for the firm, dropped back 2.5p to 48p - a slide of 5%.

The biggest Footsie risers were International Power up 14p at 440.25p, Punch Taverns ahead 34p at 1304p, Home Retail Group up 11.25p at 457.25p and Cable & Wireless ahead 4.4p at 185.6p.

The biggest Footsie fallers were Scottish & Newcastle down 8p at 617p, Shire off 12p at 1170p, Smiths Group down 8p at 1085p and Lonmin off 23p at 3311p.

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