Few would envy the task of getting Britain’s swelling ranks of unemployed back into work and keeping them there amid the recession, but it is a job that investors in Serco were more than happy to take on yesterday.

Shares in the outsourcing group rose 10¼p to 402¾p after the company was selected by the Department for Work and Pensions as preferred bidder for three contracts under the Government’s Flexible New Deal initiative worth up to £500 million.

Under the contracts, the company will support those who have been claiming jobseeker’s allowance for more than 12 months with career planning, job search advice and confidence-building. The contracts, which start in October and last for five years, are for North Wales, the West Midlands and Greater Manchester.

Chris Hyman, the chief executive of Serco, said that supporting jobseekers was a significant new market for the company and that it was positioned to win similar contracts over the next couple of years.

Overall, the FTSE 100 advanced 30.40 points to 4,417.94, led by the heavyweight mining stocks. The sector was lifted by more encouraging economic news from Japan, where industrial production data was better than expected, and from the United States, where GDP figures were not as bad as feared. Higher metals prices, with copper climbing to a three-week high, added to the positive sentiment.

Lonmin was the biggest riser, ending the day up 111p at £14.28, Eurasian Natural Resources rose 35½p to 649p and Xstrata closed 34½p up at 684p.

Banking stocks also gained ground, spurred on by positive housing figures and promising data on consumer confidence, with Lloyds Banking Group rising 3p to 68p, Barclays rising 10½p to 297½p and Royal Bank of Scotland gaining 0.8p to 38.2p.

In the FTSE 250 Hiscox fell 13p to 325p after Citigroup downgraded the insurer to “sell”, noting that, although the company was gaining ground in speciality lines of business, it feared that lower investment returns could put pressure on medium-term earnings. Citigroup also downgraded Brit Insurance to “hold”, noting that its shares, up 1¼p to 191½p, may look cheap but that concerns over capital and recessionary claims exposure would persist.

Debenhams rose 2p to 92¼p after Goldman Sachs gave it a push. The American investment bank upgraded the retailer to “buy”, saying that it looked like a market share winner still at a low valuation. However, the bank is not so keen on Halfords, the car parts and bicycles retailer, which it downgraded to “sell” because it has limited scope to improve earnings in a recovering economy.

United Business Media rose 20¾p to 434½p after management told Credit Suisse that its events business was “misunderstood” and, actually, rather resilient. The bank has reiterated its “outperform” rating.

Pendragon, the car dealer, rose 4¼p to 25½p, even though Jack Petchey, the property entrepreneur, sold his 12 per cent stake. New York: Shares fluctuated on Wall Street amid mixed economic signals. Consumer sentiment has risen in May, but the dollar is falling and oil prices are rising. At midday the Dow Jones industrial average was down by 8.36 points at 8,395.44.

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