EU chief's comments on plans for common eurobond boost Footsie

FTSE: 5,227.02 (+52.77) Mid-250: 10,107.87 (+96.82) Small Cap: 2,890.61 (+1.18)

BRITAIN’S LEADING shares closed higher yesterday after Europe’s top bureaucrat said plans for a common eurobond, seen by many as a key tool to help end the regional debt crisis, would be presented shortly.

A common bond would give the weaker peripheral countries access to cheaper funds, backed by core Europe, although regional paymaster Germany has consistently opposed such as move.

The comments from European Commission President Jose Manuel Barroso clipped gilt futures, in a further sign of investors’ willingness to take on more risk, although market conviction remained low, Yusuf Heusen, sales trader at IG Index said.

“The market remains sentiment driven,” but was unlikely to break out of current rangebound trade until firm details around a bond were released, he said.

“It’s bouncing around technical levels – having tried several times to get through 5,270,” Mr Heusen added.

Underscoring the political disunity at the heart of the crisis, Austrian approval of changes to the region’s bailout fund faced a setback after a parliamentary committee failed to clear the measure for a quick vote.

The news prompted a short-lived index pullback and comes ahead of a conference call between German, French and Greek leaders as Athens tries to implement austerity cuts and secure fresh bailout funds.

The lack of clarity was evident in the derivatives markets, Atif Latif, director of trading at Guardian Stockbrokers said.

The trading pattern also seemed “to indicate that investors are unsure about a directional play but are now trading volatility,” he said.

Integrated oils led the charge thanks mostly to BP which ended up 3.5 per cent after a key US government report into the Macondo oil spill split the blame between the firm, fellow partners in the field and contractors.

Leading blue-chip gainers in volume, nearly four times its 90-day daily average, was high street fashion retailer Next, up 6.3 per cent after its first-half profits beat forecasts.

Peers elsewhere in the sector were boosted by Next’s results, with Marks and Spencer up 2.5 per cent, although macroeconomic data did little to help, as the number of UK unemployed rose at its fastest pace for two years. – (Reuters)