City holds steady following upbeat US housing figures

The top-flight see-sawed between modest gains and falls for much of the session before eventually finishing 4.63 points higher at 5371.04.

There was little of the exuberance seen on Wednesday after positive manufacturing data from the US and China as traders awaited non-farm payrolls data today, although new figures out yesterday showed positive signals from the US housing market.

Pending sales of previously owned US homes rebounded unexpectedly in July and new claims for jobless benefits fell last week, hopeful signs for the sputtering economic recovery.

The data, including sturdy retailers sales last month, followed a report on Wednesday showing surprising strength in the manufacturing sector and suggested that investors' fears of a double-dip recession may have been overdone.

"These are further signs the economy is not slipping into a recession albeit growth still looks quite slow," said Zach Pandl, an economist at Nomura Securities International in New York.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in July, increased 5.2 per cent to 79.4 from June.

The pound was slightly down against the dollar at 1.54 and dipped to 1.20 against the euro as the single currency was helped by a successful Spanish bond auction. Wall Street was flat in early trading with little to drive stocks. The European Central Bank held interest rates at 1 per cent as expected and said it would extend support for banks into next year.

Eurozone growth for the second quarter of 2010 was confirmed at 1 per cent but data in the UK was more gloomy as construction figures showed slowing growth for a third month in a row, and the Nationwide said that house prices had also fallen 0.9 per cent in August.

The news had little impact on many housebuilding stocks in the FTSE 250 however, with Redrow and Persimmon ahead by 3.1p to 121.2p and 13.7p to 391.8p respectively.

Most of the corporate news came from other players in the second tier after a host of corporate updates.

Currys and PC World owner DSG International lost early gains after a 6 per cent rise in UK like for like sales during the first quarter, helped by Apple's iPad and demand for flat-screen televisions. Shares declined by 0.17p to 25.19p.

Recruiter Hays was 3.55p higher at 97.55p after reporting an improving outlook across most of its markets, while transport group Go-Ahead added 77p to 1165p after a better-than-expected profits performance.

One of the strongest performances in the FTSE 250 came from own-label household goods firm McBride, which cheered 19p to 160p, after lifting first half profits and a hiking dividends by 12 per cent.

And news of a 90m takeover of AIM-listed restaurant chain Carluccio's by Middle East retail giant Landmark helped lift shares 47 per cent, or 45p to 141p.

In the FTSE 100 Index, Cable & Wireless Worldwide was down nearly 2.15p to 69.8p, after the bid gossip which lifted shares on Wednesday died down. TUI Travel – another target of takeover talk – was ahead by 4.8p to 221.2p.

Also among the Footsie risers was power generation firm International Power, which added 9.1p to 387.6p after an upgrade to 'buy' from analysts at Deutsche Bank. The firm is merging with France's GDF Suez to create one of the world big-gest independent power firms.

The biggest Footsie risers were Man Group up 121/2p to 229p, Autonomy ahead 85p to 1716p and BAE Systems up 11.3p to 313.3p. The leading Footsie faller was Tullow Oil, which finished the session 49p lower at 1185p.