The FTSE 100 enjoyed a late rally and for a second day running closed near its highest level in seven years.

After a disappointing morning, the index closed 6.2 points higher at 6,730.7, just shy of its previous seven-year high of 6,732.4, set on June 15. On Thursday, the index closed at 6,724.5.

The biggest FTSE 100 riser yesterday was Northern Rock. Its shares soared in early trading after a downward turn on Thursday. The gain came after reports that the mortgage lender had attracted takeover interest from Virgin Group. The shares closed 15¼p higher at 273¼p.

Another riser was BP, as Evolution Securities raised the stock to “buy” from “add”. Richard Griffith, the Evolution analyst, said that BP’s focus was on improving operational efficiency and reorganisation. Mr Griffith set a target of 700p. BP shares closed up 25½p at 619p.

WPP, the advertising giant, gained 6p to 711½p after a positive note from UBS. The broker said that it expected WPP to post an upbeat third-quarter trading statement next week, predicting that organic revenues would be up 5.6 per cent and suggesting the “outside possibility” of a share buyback.

“We think WPP is likely to be relatively upbeat, sticking to its view that the Beijing Olympics and the US presidential elections in 2008 will provide good support for growth,” the broker said.

Cable & Wireless shares were also up, gaining 1½p to 187½p, as Credit Suisse recommended buying the shares. The broker said that it expected positive sentiment from the results. Credit Suisse has an “out-perform” rating on the stock, with a 215p price target.

On the downside, housebuilders continued Thursday’s slide amid uncertainty about the future of the housing market. The drop was sparked by Thursday’s report from the Royal Institution of Chartered Surveyors showing an unexpected September increase in the amount of its members recording a fall in property prices.

Barratt Developments was one of the FTSE 100’s biggest fallers, as Dresdner Kleinwort slashed its earnings per share forecast by 18 per cent and 37 per cent for 2008 and 2009.

The broker, which cut its target price to 573½p from 808p, said that Barratt was its “biggest sell” and it had been “an accident waiting to happen ever since the Wilson Bowden deal”. Barratt shares were down 23p at 699p. Taylor Wimpey fell 9½p to 281¼p. Persimmon fell 27p to 976p.

Schroders was the biggest FTSE 100 faller, with shares down 69p to £14.91 after large gains earlier in the week.

Shares in Experian were down more than 2 per cent, or 10½p, to 498p, despite positive comments from Oriel Securities. Andrew Gibb, the Oriel broker, said that, although the stock may be held back in the short term over concerns in the United States, emerging markets will drive business in the medium term. He said that Experian’s acquisition of a further 5 per cent stake in the Brazil-based credit bureau Serasa was good news.

* * * *

New York: Stocks rose on Wall Street after economic readings indicated that the US economy continued to push ahead. The Dow Jones industrial average closed 78.00 points higher at 14,093.10.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive