US data push Footsie to another six-month high

LONDON REPORT: Better-than-expected US manufacturing data supported solid buying in London yesterday, with stocks exposed to the US, such as WPP and Amvescap, leading the way.

FTSE 250: 4,879.9 (+64.3); FTSE SmallCap: 2,055.1 (+25.2)

The FTSE 100 rose 2 per cent to another six-month high of 4,129.3, with the FTSE 250 1.3 per cent firmer at 4,879.9, a nine-month high. Volume was a solid 2.6 billion shares.

On a quiet day for corporate results, the market turned its attention to statements due later in the week.

Electrical and DIY retail Kingfisher rose 5.6 per cent at 270p, ahead of its first-quarter results tomorrow. Deutsche Bank upgraded its price target to 320p from 280p, citing strong synergies from the acquisition of French DIY retailer Castorama and "rapid profit growth" at Brico Depot, another of its French divisions. The appreciation of the euro against sterling will also have helped Kingfisher's fortunes, Deutsche said. The German bank further applauded the forthcoming demerger of Kingfisher's electrical retailing operations.

But Cable and Wireless slid 4.4 per cent to 98p as analysts played down the significance of the alternative telecom group's long-awaited strategy announcement, also due tomorrow, which has fuelled a doubling in the share price this year.

"We can't see how they can restructure without pain. It seems a peculiar suggestion to exit from Japan or the UK where they are succeeding. However, it will be expensive to withdraw from the US," said Mr Andrew Darley at ING.

Colt Telecom topped mid-cap gainers, surging 17.2 per cent to 75p, its highest level since January 2002, as Panmure raised its price target to 80p from 60p and reiterated its "outperform" rating.

Elsewhere, advertising agency WPP Group rose 6.8 per cent to 523½p amid reports it was sizing up troubled smaller rival Cordiant Communications, which gained 9.1 per cent to 6p.

But Mr Richard Hitchcock at Numis Securities said: "I suspect any bid won't be terribly generous. Cordiant said they hadn't received an offer near the current price. Due diligence is a perfectly natural thing to do, to look closely at the information of a competitor."

The leader board on the senior index was dominated by banks, life insurers and asset managers.

Gainers included Amvescap, 7.2 per cent higher at 397p, and Lloyds TSB, up 5.8 per cent at 473½p.

IT services group Xansa rose 12.2 per cent to 105½p, with mobile equipment and software group Psion 7.3 per cent higher at 73½. Chip designer Arm Holdings continued its recent run, rising 10.1 per cent to 84¼p as the Semiconductor Industry Association reported a 9.7 per cent increase in worldwide chip sales in April compared to April 2002.

Bus and train operator Stagecoach rose 5.8 per cent to 54½p as it announced the sale of CoachUSA's New England Region for $40 million.

And Phytopharm rose 26.5 per cent to 212½p after Nomura reiterated its "buy" rating, claiming the biotechnology group's cactus-based obesity treatment could become a $3 billion drug.