Retailers help FTSE rebound

London equities bounced back on Thursday, helped by better news from the UK high street as well as continued strength among property companies.

The FTSE 100 opened 0.9 per cent higher at 5,998, a rise of 56 points, with the FTSE 250 up 1.9 per cent at 9,806.7, a rise of 179.8 points.

Home Retail Group offered more insight into the mixed Christmas spending pattern on the high street. It reported a 0.2 per cent fall in like-for-like sales at its Argos catalogue shopping chain. The picture was worse at its Homebase home improvement stores, where like-for-like sales fell 6.3 per cent. But the company also said it expected annual profits to reach the top end of forecasts, helping its shares rise 5.9 per cent to 288½p.

There was a better showing at Primark, the budget fashion outlets owned by Associated British Foods. Although the company failed to give like-for-like sales data, it said total sales, which includes the contribution of new retail space, rose 26 per cent, beating forecasts. ABF said group revenue in the 16 weeks to January 16 rose 13 per cent. Its shares were 8.2 per cent higher at 838½p, the biggest rising stock on the FTSE 100.

Mid-cap music retailer HMV made more progress, up 13.9 per cent to 115½p it reported a 14.1 per cent rise in festive like-for-like sales at its core UK and Ireland business. It also predicted annual profits would reach the top end of market forecasts.

A prediction of "short, sharp counter-trend rally" in the property companies by Morgan Stanley helped foster further gains for the sector, which continued to look undervalued after its poor showing in 2007. The US investment bank also upped its rating on British Land to "overweight" from "underweight", helping the stock rise 6.7 per cent to 982p. Brixton was 7.9 per cent higher at 329.8p, while Hammerson was 4.5 per cent stronger at £10.68

On the downside, brewer SABMiller fell 1 per cent to £12.33 after it reported growth in lager volumes of 4 per cent, at the bottom of forecast ranges.

Overnight in New York, Wall street indices rallied off session lows in volatile trade. The Dow Jones Industrial Average finished 0.3 per cent weaker at 12,466.2, with financial stocks buoyed after JPMorgan cheered the investors by avoiding severe subprime-related losses.