Fears of another warning over rising raw material costs sent Premier Foods down 7 per cent to 124.5p.

UBS downgraded from buy to neutral saying the food producer's shares had recovered far enough since it renegotiated debt and cut the dividend and that its May 16 trading statement would likely be grim with a warning of soaring raw material costs combined with flat earnings hit by problems with its new IT system.

As if to underscore the point, McBride, Europe's largest maker of private label cleaning goods and personal care products fell 8 per cent to 102.75p after warning of "unprecedented and continuing increases in our raw material costs" that had hit its profits since the start of the second quarter.

Stellar results from the two oil giants BP and Shell helped lift the FTSE 100 despite weakness in mining stocks as the stronger dollar weighed on metals prices.

The FTSE 100 was up 30.3 at 6120.6 by 10.40am, with Shell the biggest gainer, up nearly 6 per cent at £20.53.

BP was close behind up 5.5 per cent at 610p and the strong figures raised hopes for BG Group's profits. BG lifted 3.5 per cent to £13.44 and Cairn Energy was up 1 per cent at £30.34.

Eurasian Natural Resources was the top faller, down 3.4 per cent at £12.45 as fears over a Kazakhstan metals export duty continued to weigh. Kazakhmys was also down: 3 per cent at £16.77.

Anglo American lost 2.6 per cent to £32.54 after its trading statement revealed that production of precious metals such as platinum and palladium and of coal had been hit by South Africa's power crisis.

The bank sector was broadly flat on news of HBOS's widely flagged £4 billion rights issue. HBOS was down 1 per cent at 490.75p but Barclays was down further,1.59 per cent at 463p as the market speculated they would be the next to issue new shares.

British Airways lost 2 per cent to 218.25p on talk that it was guiding down analysts for another profit warning next month over the soaring cost of fuel.

The oil price slipped off record highs as the Grangemouth refinery strike ended.

The FTSE All Share's biggest gainer was Taylor Nelson Sofres, the market research company, which jumped 16 per cent to 199p after it said it had signed an outline agreement to undertake a nil premium merger with GfK of Germany. The new company would be called GfK TNS with 50 per cent held by the shareholders of each.

ARM Holdings was up 13 per cent at 99.75p after the mobile phone microchip designer said revenue growth in 2008 would match the growth seen in 2007.

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