FTSE follows US lead despite Corus fall

The FTSE 100 climbed 41 points to 5929.3 today, driven by strong M&A talk in the financial services sector and as-expected second quarter GDP figures from the US.

A fall in first-half profits for Corus, the steelmaker, failed to knock the wind out of the index's rise.

Wolseley, the plumbing and building group, rose 46p to £11.35, making it the biggest riser in the FTSE 100. Shares in the group have been on a downward spiral since March amid concern over the state of the US housing market, but better-than-expected results from its rival CRH gave investors hope that Wolseley would announce good news at its full-year results on September 25. Shares in the group have fallen 23% since the end of March, when they reached a high of £14.62, which has sparked talk that Wolseley could be vulnerable to a bid.

Strong M&A chatter lifted stocks in the financial services sector, led by the life insurers. Prudential was up 15p to 593.5p on fresh talk that its larger rival Aviva was eyeing up another approach, and other insurers followed. Legal & General rose 2.25p to 133.5p and Old Mutual was up 4p to 164p.

Diageo also rose ahead of tomorrow's full-year results, as investors expected the maker of Smirnoff vodka and Johnnie Walker whisky to post a strong rise in profits. In a trading statement in June, the group said underlying sales rose 6% and operating profits increased 7% for the 12 months to the end of June. Shares rose 14p to 959p.

But Corus headed the list of fallers on the FTSE 100 as a bad set of results spooked investors. First-half pre-tax profits for the Anglo-Dutch steelmaker fell 62% due to a fall in selling prices and a rise in energy and raw material costs. The group said global demand for steel was expected to remain "robust" in the second half of the year, adding that selling prices would rise during that period. But it warned that this would be offset by higher raw material costs and reduced steel production. Shares fell 7.25p to 393.25p. Richard Hunter, head of UK Equities at Hargreaves Lansdown Stockbrokers, said: "Despite higher steel prices and inexorable demand, Corus has been unable to capitalise on this feast due to lower selling prices and higher costs. It maintains that the trading pattern will improve slightly over the next few months, but costs will remain an issue."

Property companies also took a beating as JP Morgan downgraded the European property sector to "neutral" from "overweight", and further lowered its recommendations on six real estate stocks. Land Securities was the most affected as the brokerage decided to remove the stock from its analyst focus list. Its shares were down 13p to £18.96. Hammerson also fell 7p to £12.81 and Great Portland Estates was down 4.5p to 559.5p.

In the FTSE 250, LogicaCMG, the IT company, was one of the biggest fallers, posting a 21% fall in first-half pre-tax profit to £29.5m. Shares fell 6.25p to 153.5p, despite a positive outlook for the full year. The group said demand for IT services continued to improve and that its expectations for the year remained unchanged.

Shares in Johnston Press rose 19.5p to 402p despite the publisher posting a 2.9% fall in first-half pre-tax profit due to a sustained advertising downturn. The company said the second half had started with "no discernible improvement in advertising revenues", adding that it did not see any early recovery in revenue performance. But finance director Stuart Paterson said he was comfortable with analysts' full-year pre-tax profit estimates of about £143m and chief executive Tim Bowdler said he considered the group well positioned for any recovery in the advertising cycle.

Filtrona posted a good set of first-half results and was rewarded with its shares going up 9p to 278p, as it announced a 9.9% rise in pre-tax profit for the six months to the end of June. The supplier of plastic and fibre products - spun off from packaging group Bunzl last June - warned that the second half would be affected by a weaker dollar and higher interest rates, but that it would progress "satisfactorily" all the same.

In the smaller cap arena, Radstone, the computer hardware maker, soared 47p to 372p on news that Italy's Eurotech controlled 31.8% of the company. Radstone's board rejected Eurotech's improved bid earlier in the day, valued at £109m in cash. But Eurotech hit back with the announcement it had bought 15.9% of Radstone, and had a letter of intent from Invesco Asset Management committing a 2.8% stake - meaning it now controls 31.8% of the group directly or indirectly.