Britain's top share index rises

Britain's top share index ended up 0.7 percent on Thursday, as mining and oil shares helped a rebound ahead of a decision on US interest rates. The FTSE 100 closed up 43.7 points at 6,571.3, but underperformed other major European markets because of its defensive composition.
The UK index has lost 0.8 percent so far this month. The FTSEurofirst index of leading European companies closed unofficially up 0.9 percent, bouncing off its lowest close in two weeks on Wednesday due to worries about the impact of the US mortgage market on the broader economy.
"The market is focused on the Federal Reserve's decision this evening. It has been a quiet day in the market, with the oil stocks as the key movers," said Tim Whitehead, head of portfolio services at Redmayne-Bentley. "It is very difficult to gauge at the moment. If I have to call it, the market might drift a bit lower in the short-term."
"Over the next three months there could be further pain on the way, as investors focus on the fact that mortgage rates are going up. A lot of people coming out of fixed-rate mortgages are going to feel the pinch, and consumer spending will be affected as a result."
Oil shares were the standout gainers, contributing 25 points to the index's rise as crude edged up near $71 a barrel. Index heavyweight BP advanced 2 percent, and rival Royal Dutch Shell tacked on 2.5 percent.
Miners also rebounded from recent heavy losses as copper prices bounced back. Rio Tinto and BHP Billiton climbed 2.5 and 3.1 percent, respectively. Shares in Vodafone added 1.5 percent as traders cited market talk that the company would clinch a deal to distribute Apple's recently launched iPhone. Vodafone stock has gained nearly 6 percent this week.
UK property stocks were also in demand, with Land Securities adding 1.1 percent and Liberty International up 1.5 percent, as traders said the sector had been oversold in recent sessions on the back of interest rate concerns.
Following the recent sell-off in global equities, all eyes were on the US Federal Reserve's verdict on interest rates, due at 1815 GMT. Analysts widely expect the Fed to keep rates steady at 5.25 percent, but the accompanying statement will be scrutinised for clues on future policy.
"Clearly a sustained hawkish tone (from the Fed) has the potential to further pressure shares, but it seems as if some suggestion that rates may soon ease would help equity markets in general finish the quarter on an upbeat note," said Jimmy Yates at CMC Markets.
In the UK, the Bank of England Governor Mervyn King said economic output growth had proved resilient despite steady rises in interest rates, but there were tentative signs consumer spending may be softening.
A Reuters poll showed UK interest rates were highly likely to climb next week to 5.75 percent and almost half of the 70 economists surveyed now expect rates to reach 6 percent by year-end. Northern Rock fell 0.6 percent, adding to a 12 percent plunge after the mortgage lender cut its 2007 profit forecasts, while Royal Bank of Scotland lost 1 percent.
Diageo, the world's biggest alcoholic drinks group, dipped 2.5 percent to top the losers' list after saying it had stuck to its forecast for underlying operating profits for the fiscal year just ending, despite having seen an improvement in European sales growth in early 2007.
Among other individual movers, credit-information firm Experian extended gains to rise 3.4 percent on the back of increased target prices and rating upgrades after its deal this week to take a majority stake in Brazil's Serasa. Cadbury Schweppes climbed 2.4 percent after the company said US investor Nelson Peltz had acquired 3.47 percent of voting rights.