ICI leads FTSE gains as profits beat forecasts

The focus was corporate fundamentals on the London market yesterday as a spate of strong earnings reports picked up where this week's bid speculation left off - combining to push prices sharply higher across the board.

Helped again by a strong showing on Wall Street, the FTSE 100 ran 73.3 points higher to 5431.9. Having fallen from the 5500 level at the start of October to a low point of 5142 a fortnight ago, the main index has now clawed back almost 300 points - a move of 5.6%.

Topping the table yesterday was the chemicals giant ICI. Impressive third-quarter figures beat City expectations, with profits at a pre-tax and special items level coming through at £133m, compared with £123m last time.

The company seems to have been particularly successful at passing increased raw material and transportation costs on to its customers, so the share price celebrated with a 19.25p rise to 313.25p.

Tate & Lyle was a similar case, with interim profits up by 9% to £136m. A key contributor has been sales of the company's zero-calorie sweetener Sucralose, where demand is said to be outstripping the pace at which the company can produce the stuff. The sugar refiner has three new plants in the pipeline: two in the US and one in Singapore. While City analysts remain divided over the firm, its shares jumped 29p to 500p.

Over in the hotels sector, Millennium & Copthorne had some cheery news in the form of strong growth in the US and Asia, which has helped cushion the group from the sharp fall-off in London after July's bombings. Third-quarter profits rose 50% at the pre-tax level to £20m. A cautious statement accompanied the figures, saying that "given uncertainty in the global economic and travel environment, the outlook for growth in 2006 is unclear". But the shares still advanced 8.25p to 387.25p.

Fresh gains were made among the big resources stocks. Rio Tinto, for example, rose another 65p to £22.57 - threatening to break up through the high of £23.46 set in late September. Anglo American, meanwhile, put on 31p to £17.09, and BHP Billiton added 25p to 862p.

Elsewhere, takeover hopes were quashed at UK Coal, which said that a putative bid from a consortium, including the private equity group Alchemy Partners, had been called off. The consortium members said they might reconsider their position if another bidder emerged. Shares in UK Coal fell 9.5p to 134p.

The possibility that PartyGaming might bid for the rival internet poker business Empire Online generated interest in Gaming VC, which climbed 4.5p to 407p, while Sportingbet, which was threatening to take over Empire in September at almost twice its current price, added 4p to 304.5p. Gaming VC recently put back the release date of its next figures until November 14 but rather than producing market jitters, some followers insist the numbers will be rather better than the market generally expects.

A few punters were pushing the story that WH Smith has again attracted private equity interest, possibly from the US. The last promised bid was defeated by the issue of Smith's pension fund. Yesterday the price ticked 2.5p higher to 378.75p.

Abcam, a profitable biotech specialising in antibodies, enjoyed a strong debut on the Aim market, having raised £10m to develop its customer base and expand into new markets. Against a placing price of 167p, the stock closed at 201.5p. The retirement home builder McCarthy & Stone suffered a mauling after news that full-year profits fell 3.5% at the pre-tax level to £127m in the year to August. Analysts raced to revise their numbers, with Numis saying that "slower sales rates will lead to lower overhead recovery, further pressure on margins and, in turn, will lead to lower profit than we currently forecast". The shares fell 35p to 615p.

Continuing worries about consumer electronics sales weighed on Alba, which fell another 20.75p in thin trading to 348p. The stock has more than halved over the past year.

Mowlem, the construction group which revealed takeover talks with an unnamed party earlier in the week, ran into some heavy profit-taking, sending the shares 15p lower to 180.5p. Recent sum-of-the-parts valuations have sought to highlight the value of Mowlem's portfolio of PFI contracts, with Bridgewell Securities suggesting the stock is worth 233p. But there are real concerns that a bid will actually emerge.

Danka Business Systems, the photocopier group, slid 3.75p to 25p after the release of interim figures. Operating losses stand at $5m (£2.8m) after more restructuring charges.

Goshawk Insurance shocked followers with news that it had breached its banking covenants and would now see its insurance licence in Bermuda restructured. The shares - which were trading as high as 44p in August - slumped from 9.5p to 5.5p yesterday, valuing the business at about £10m.

The company is a very visible victim of the recent hurricanes in the US, having been hit by a wave of claims. Hurricane Wilma alone could cost the company up to £9m.