FTSE ahead despite weak UK growth

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The FTSE 100 Index rose 33 points to 6070 at noon

The Bank of England’s downgrading of the UK’s growth forecast could not stop the FTSE 100 Index from making gains.

The Bank slightly downgraded its predictions for growth for this year and also warned in its quarterly inflation report that CPI could rise towards 5% in the coming months.

But the Footsie maintained the advances seen earlier in the session, surging ahead 33.1 points to 6070.2.

The pound slumped against the dollar and the euro after the Bank’s governor Mervyn King hinted that interest rate rises will be gradual. It stood at 1.61 against the greenback and at 1.19 against the single currency.

The Footsie’s strong performance followed a decent session for Asian markets, which saw the Hang Seng and the Nikkei make gains.

The risers board in London featured several property stocks after HSBC and Goldman Sachs upgraded stocks from the sector, including Land Securities and British Land, up 23.8p to 725.8p and 12.3p to 555.3p respectively.

Heavily weighted banking stocks also made further gains after Barclays reported a 32% rise in profits to £6.1 billion on Tuesday, as HSBC and Royal Bank of Scotland both rose 2%.

Anglo-Australian miner BHP Billiton was the biggest Footsie faller despite reporting a 71% jump in half-year profits to 10.5 billion US dollars (£6.5 billion) and pledging to return 10 billion US dollars (£6.2 billion) to shareholders this year. The company said it was “cautiously optimistic” about the short-term outlook for the global economy but shares slipped 57p lower to 2443p.

Beer giant Heineken refreshed markets after it delivered better-than-expected results amid “challenging but improving” economic conditions. The company reported strong profits growth in the UK despite a declining beer market as it benefited from price increases and cost savings, including the closure of breweries in Reading and Dunston near Newcastle.

In the UK retail sector, Thorntons shares fell 6p to 93p after it revealed a drop in half-year profits and said trading so far in 2011 has been weak. The chocolatier revealed that December’s snow had increased costs in its supply chain by £500,000 and said some of its stores may close when their leases come up for renewal.

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