Wednesday Closing Market: Insurers propel FTSE despite bank drag

Impressive performances from some of the UK’s biggest insurers helped the FTSE 100 close 1.9% stronger.

The blue chip index ended the day at 5,420 points after Aviva's 8.7% gain to 507.5p led the insurers. The Norwich Union parent said it had finally reached a deal that would see payouts for 1 million policyholders, and reported a 12% rise in interim operating profits to £1.79 billion.

Admiral, whose brands include Elephant and price comparison website Confused.com, managed record half-year results prompting an impressive 10.79% rise in its share price to 914p.

Lloyds remained the biggest faller at the final bell as investors digested the news that it had notched up a 70% fall in profits. The bank slid by 4.67% to 306p. Not far behind was HBOS, dropping 0.55% to 271.25p ahead of its first-half figures tomorrow in which its high exposure to the UK property market will come into focus.

Cadbury, which announced it was reviewing its costs in the face of the uncertain economic outlook, lost earlier gains to fall 0.88% and close at 620p. The company's cost-cutting plans came despite a 46% rise in profits during the first half of the year.

Drax was also down, losing 1.9% to 719p. The company runs one of Europe’s largest coal powered stations and its profits are pegged to the fortunes and pitfalls of the oil price, which fell 0.99% to $121.20 a barrel.

There was good news in the US as well, after a jobs report provided a surprise boost. At 16:30 UK time, the S&P 500 index had risen just shy of 1% to 1,275 points, while the Dow Jones Industrial Average had put on 1.15% to 11,525.