The FTSE 100 index of Britain’s most valuable companies reached its highest level for nearly two months yesterday as better than expected US economic data cheered traders.

Financial stocks and retailers were buoyed by data that showed the US economy grew at a solid 3.3 per cent annual rate in the second quarter. This was in stark contrast to UK data, which showed record falls in house prices and retail sales. The index rose 73.1 points to 5,601.2.

J Sainsbury, the supermarket chain, led the charge, up 25¼p to 244p, on renewed takeover talk with rumours of an imminent 500p bid. Traders speculated that Robert Tchenguiz, the property tycoon, was putting together a consortium to bid for the company, which includes Qatari fund Delta Two. Last year Delta proposed a 600p-a-share offer for the company before withdrawing, blaming worsening credit markets and the cost of winning support from the group’s pension trustees.

Other retailers, such as Next, up 42p to £10.57, and Kingfisher, 6.6p higher at 133.3p, rose on the back of US GDP figures.

Better news for the US economy is particularly good news for Wolseley, the heating and plumbing giant, which makes most of its sales across the Atlantic. Shares in the company, which have been hit in recent months by the plummeting US housing market, rose 24½p to 442p.

Bank stocks also advanced on the data and were given a boost earlier in the session by better than expected results from Crédit Agricole, the French bank. Barclays rose 19¼p to 349½p, HBOS gained 12¼p to 305½p and Royal Bank of Scotland advanced 8¼p to 230p.

However, mining stocks were under pressure after Kazakhmys, down 34p to £13.05, reported disappointing first-half results, with profits dropping to $608.4 million (£333 million) from $794.2 million last year as copper cathode production fell. Eurasian Natural Resources, in which Kazakhmys holds a 25 per cent stake, also lost ground, down 22p to £10.21.

Vodafone had a mixed day, closing 1.3p higher at 142.9p, after losing ground earlier in the session following a warning from analysts at Société Générale that investors had overlooked the rising cost of providing data services. The broker cut its target price on the stock to 120p from 141p and reiterated its “sell” rating, noting that the cost of providing enough spectrum for its fast-growing data services could increase by £4.3 billion over the next two to three years.

Big falls in house prices are no longer a surprise, so the FTSE 250’s building stocks took the latest Nationwide figures, showing a 1.9 per cent drop in August, more or less in their stride. Taylor Wimpey rose 5p to 53¼p, Persimmon added 27¼p to 376p and Bellway gained 46p to 640p.

Bodycote, the engineer, advanced 14p to 224p after selling its testing business to US private equity firm Clayton, Dubilier and Rice for £417 million and proposing the return of £260 million to shareholders.

Aegis, the advertising group, fell 5½p to 110p as good interims were overshadowed by a cautious outlook.

New York: Stocks rallied on Wall Street as the upward revision to second-quarter growth and lower oil prices fanned optimism. The Dow Jones industrial average closed 212.70 points higher at 11,715.20.

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