The FTSE 100 ignored overnight falls in Asia Pacific to rise 12 points, or 0.2%, to 6,166, extending its four-year high and taking its cue from the rise in US markets on Friday in response to developments in the country’s debt ceiling talks.
However, Pearson and Meggitt were in the spotlight as both stocks fell heavily in early trading.
Pearson (PSON.L) shares tumbled 41p or 3.3% to £11.98 after the education and media group edged down its guidance for 2012 earnings per share and warned that tough conditions and structural change would continue to dominate its market this year.
The publisher of the Financial Times now expects adjusted earnings per share of around 84p, down from the 84.9p it stated in October, with full-year operating profit of around £935 million.
Cuts in government spending would continue to hold back its school publishing business in the UK and US, it said, although its international division would report double digit sales growth due to the strong demand in emerging markets.
Meggitt (MGGT.L) shares slid 7p or 1.7% to 429p after a US subsidiary of the aerospace and defence group said it was helping investigators looking into the technical faults that have grounded Boeing’s 787 Dreamliner planes.
(Update) Arizona-based Securaplane Technologies makes a charger for the batteries which have been the cause of the problems for the Dreamliner planes. According to Reuters, investigators will test and examine the charger before moving on to carry out tests at United Technologies, which makes the auxiliary power unit for the planes.
Meanwhile, Admiral Group (ADML.L) shot up 57p or 5% to £12.11 after Goldman Sachs upgraded the car insurer to ‘conviction buy’ from ‘neutral’.
IAG (ICAG.L), owner of British Airways, also got a boost, firming 3p or 1.4% to 211p after Credit Suiise upgraded it to ‘outperform’ from ‘neutral’.
Markets are expected to be quite today with the US stock market closed for the Martin Luther holiday.
On currency markets the pound fell to a nine-and-a-half month low of 81.8 against a trade-weighted basket of currencies. The yen fell 0.5% to 89.5 yen to the dollar as the Bank of Japan began a two-day meeting at which it is expected to double its inflation target to 2%.
Other rises and fallers
Randgold Resources (RRS.L) gained 26p or 0.5% to £58.41 as production at its Tongon mine in Cote d'Ivoire returned to normal after a fire three weeks ago.
Afren (AFRE.L) added 3.2p or 2.4% to 138p after the oil producer said it hit targets with output last year.
Imperial Tobacco (IMT.L) shrugged off weekend reports of a possible shareholder revolt over executive pay as its shares firmed 14.7p or 0.6% to £23.91.
Resolution (RSL.L) rose 3p or 1.2% to 267p aftre the insurance company consolidator said former Standard Chartered boss Malcolm Williamson would succeed Mike Biggs as chairman later this year.
Stobart (STOB.L) advanced 2.9p or 3.2% to 94.4p after the haulage firm appointed Avril Palmer-Baunack as executive chairman. Palmer-Baunack joined the board following Stobart's acquisition of Autologic last year. This month it warned that full-year operating profits would be lower than forecast.
Shares in online travel group Travelzest (TVZ.L) lost over a third of their value, dropping 2p to 3.1p after talks to sell its Canadian businesses ended.