Xstrata rose nearly 6 per cent on high volume to a new record high of £41.71 on continuing talk that Vale of Brazil has raised its offer from £40 to £47 a share.

Vale advisers are talking to Xstrata in London today, Reuters reports.

Alliance & Leicester, which fell to a seven-year low yesterday after its profit was hurt by massive writedowns and it warned of tougher times in 2008, lost another 18p to 474p close to its all-time low as analysts downgraded the mortgage bank.

Morgan Stanley cut to underweight with a 370p target and said that the dividend would likely be halved next year while Goldman Sachs reiterated its ’sell’ and cut the target to 455p.

A&L has pledged to hold the dividend for 2008. But Morgan Stanley's Michael Helsby said: "With a further £100mn of write downs now forecast in 2008 the dividend is not covered by core earnings in 2009.

"To quote the FD in the conference call, any slippage in profits from here makes the dividend very difficult.

"We believe it prudent to forecast a 50 per cent dividend cut and expect the shares to trade toward book value."

A raft of better than expected corporate earnings combined with a more optimistic Wall Street helped London shares trade up today.

Reed Elsevier led the way announcing plans to sell its trade publications and buy an insurance data firm, gaining 6 per cent to 616.5p.

Miners were also powering the FTSE 100 as record gold and platinum prices and rising copper prices helped to lift Vedanta Resources, Antofagasta, Lonmin and Kazakhmys all by roughly 4 per cent.

Vodafone recovered 3 per cent to 167.4p after Merrill Lynch said fears about a US price war hurting its earnings were overdone.

By 11am London's leading index was up 70.1 at 5963.7.

The release of strong retail sales growth figures in January from the ONS and better than expected figures from Kingfisher, the owner of B&Q, also helped to restore some sentiment to retailers. Kingfisher was up 2.3 per cent at 135p.

Scottish & Newcastle was one of the hardest fallers, off 2.6 per cent at 786.5p after SABMiller said last night after the market had closed that it had examined a counter bid for S&N but eventually ruled it out. SAB was up 2.3 per cent at £11.07.

BP lost 1p to 556.5p after Citigroup cut its rating to sell ahead of Tony Hayward's strategy day next week saying that the oil giant had not invested enough in exploration while the oil price is rising.

In the FTSE 250, BlueBay Asset Management continued its rally, up 7 per cent at 290p after strong results yesterday.

Galliford Try, the construction group and housebuilder, lost 6 per cent to 75.5p after warning that it was cautious about this year with the spring house-selling season still not complete.

UBS cut Hochschild Mining from buy to neutral and it lost 3.7 per cent to 403.5p.

Kiwara, the Zambian based explorer, jumped 14 per cent to 24.5p after it unveiled deeper than expected copper deposits at its site in the country.

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