Footsie follows Wall Street lead into positive territory

The FTSE 100 Index spent much of the session in negative territory before closing 49.24 points higher at 5383.45 following a positive start in New York.

The Dow Jones Industrial Average was 1 per cent higher at the time of London's close as domestic issues returned after a week of fretting about the euro debt crisis.

The boost for Wall Street came from a report showing exports jumped in March to their highest level since 2008, signalling a further improvement for the manufacturing sector after consistent improvement in recent months.

Both exports and imports climbed to their highest levels since October 2008, according to the report from the Commerce Department.

"It's an encouraging sign that growth in trade volumes is picking up, another indicator that the US and global recovery is stronger," said Zach Pandl, a US economist at Nomura Securities International in New York.

Some economists expect the data will lead to an upward revision in the government's measure of first-quarter economic growth.

Currency markets in London were initially reassured by the UK's first coalition government since the war, but this was offset by later comments from the Bank of England that risks to the UK economy remain on the downside.

This prompted analysts to put back their expectations for interest rate rises, causing a reversal in sterling's initial gain against the dollar.

The pound retreated from above the 1.50 barrier to near 1.48, while it dipped against the euro after Spain unveiled new spending cuts that helped ease worries about the continent's debt crisis.

Banks were among those in uncertain form, with Royal Bank of Scotland surrendering an initial gain to stand 3 per cent, or 15/8p lower at 485/8p. Lloyds Banking Group fell 3/4p to 591/2p.

Speculation of a takeover move by Standard Chartered for the Nedbank business owned by Old Mutual caused shares in the latter to rise by 4 per cent, or 45/8p to 119p. Standard was a penny higher to close at 1703p.

Elsewhere in the top flight, shares in catering giant Compass moved in the right direction after it reported a 14 per cent rise in first half profits and said it was hopeful of further sales growth in the second half.

It reported a slight acceleration in the rate of new contract wins and said 93 per cent of existing contracts have been retained. Compass shares were 28p higher to stand at 5571/2p – the highest level since 2001.

Outside the top flight, shares in ITV rallied 7 per cent despite the Competition Commission's decision that rules designed to protect advertisers from the broadcaster's market dominance should stay in place.

With the watchdog agreeing that there should be a wider review of the whole system for selling TV advertising, ITV shares rose 4p to 611/2p.

Barratt Developments – up 63/4p to 1231/4p – was another strong riser after it said it expected to report an underlying profit in the second half of its financial year. Other housebuilders were on the front foot with Bovis Homes advancing 131/4p to 3951/4p and Persimmon ahead 163/4p to 4537/8p.

Logistics and transport group Stobart rose 47/8p to 155p after it said new contracts and an improvement in margins had boosted annual profits by 54 per cent.

The biggest Footsie risers of the session were TUI Travel up 161/8p to 265p, Thomas Cook ahead 131/8p to 2321/8p, Rolls-Royce up 311/2p to 611p and Compass.