Market edges higher despite gloom

London market edges higher as dealers shrugg off services sector gloom

The London market has edged higher as dealers shrugged off gloomy news from the UK's dominant services sector.

The FTSE 100 Index was 28 points higher at 4262.2 by the mid-session, but moved in a narrow range amid lacklustre volumes.

The modest rise came despite the disappointing survey, although corporate news was thin on the ground and there was was no guidance from Wall Street as US markets are closed for the Independence Day holiday.

The blue-chip index stemmed the losses seen in the previous session after grim US unemployment data caused shares worldwide to slide on Thursday afternoon. But there was more gloom in the UK as the Chartered Institute of Purchasing and Supply posted an activity index of 51.6 - down from the previous month's 51.7 when the sector notched its first month of growth since April last year.

The worries over global economic growth were again reflected in trading for mining shares, with Kazakhmys down 8p at 638p and Vedanta Resources off 12p at 1376p.

Insurer Friends Provident led the fallers board, down more than 8% or 5.6p to 62.5p, as shares adjusted for the disposal of its majority stake in F&C Asset Management to its shareholders. The move will allow Friends to focus on the task of reviving its core business.

British Airways was expected to attract interest later in the session as the under-pressure company is due to post traffic figures for June. In the meantime shares rallied 2.5p to 121.5p as Nomura started coverage of the carrier at neutral.

The leading Footsie riser was publishing and media group Reed Elsevier, which gained 15.75p or 455.75p or 4% after Credit Suisse brokers upped the European media sector to overweight. Banks also featured on the risers board in a decent finish to the week, with Barclays ahead 5.8p to 294.8p, HSBC 10.6p stronger at 510.9 and Lloyds Banking Group up 1p at 66.9p. Royal Bank of Scotland joined the hunt with shares up 0.7p to 38.6p.

On a quiet day for corporate news, Balfour Beatty shares were 6.5p lower at 301.75p, even though the construction firm said it had been trading in line with expectations.

In the FTSE 250 transport group Arriva lost 14.5p to 390.5p despite a buy recommendation from Nomura. Other stocks favoured by the firm in the sector, Stagecoach and Go-Ahead, rose 1p to 127.5p and 4p to 1194p respectively.