Transport giant FirstGroup lost more than a fifth of its stock market value today after the embarrassing Government u-turn dealt a blow to its hopes of running the West Coast franchise.

The FTSE 250-listed company saw shares plunge 21% or 50.6p to 193.4p, wiping more than £240 million off its value, following news the Government was pulling its offer due to significant technical flaws in the handling of the bid process.

The top flight closed in positive territory - up 16.4 points to 5825.8 - as the Dow Jones Industrial Average on Wall Street rose 40 points in early trading after a better-than-expected US services sector survey.

The Institute for Supply Management purchasing managers index rose to 55.1, where 50 marks growth, against expectations for 53.1, however, a similar survey for the UK disappointed as it showed the rate of growth in services slowing down.

Britain's disappointing services performance reined in recent economic recovery hopes, which left the pound at its lowest against the US dollars for three weeks, at just under 1.608 dollars.

Sterling also fell to 1.245 euros as the single currency strengthened on hopes that Spain will seek a bail out soon.

Among stocks, the supermarket sector was in focus on the FTSE 100 after figures from Tesco and Sainsbury's.

The latter's shares were 2% or 5.7p higher at 352.5p after a 1.9% rise in like-for-like sales in the 16 weeks to September 29, compared with 1.4% growth in the 12 weeks to June 9.

The grocer's update came as number one competitor Tesco revealed 0.2% growth in like-for-like sales -also excluding fuel and including VAT - although Tesco's second quarter covered a different trading period.

However, Tesco shares fell into the red after a 12% decline in group pre-tax profits to £1.7 billion in the six months to August 25, driven by a downturn in Asia and Europe.

Shares fell 8.8p to 328p despite the supermarket giant reassuring that it was on the road to recovery after six consecutive quarters of sales decline in the UK.

Other fallers included support services firm Capita after it revealed that another supplier was in talks with the Home Office over a contract to support the Whitehall department's vetting and barring scheme. Shares fell 12.5p to 763p, a drop of 2%.

Outside the top flight, low-cost airline easyJet jumped 4%, up 21p to 615p, after it upped profits guidance for the year to September 30 to between £310 million and £320 million, helped by strong post-Olympics demand for holidays and a quiet summer for airport disruption.

And while FirstGroup suffered, one of the defeated parties in the earlier West Coast bidding process saw its shares rally 2%.

Stagecoach has a 49% stake in Virgin Rail Group and is expected to be back in the frame when the franchise is re-let next year. Shares were 5.5p higher at 288.8p, while Southern operator Go-Ahead was 2p higher at 1343p.

The biggest Footsie risers were International Consolidated Airlines Group up 4.7p to 163.7p, Arm Holdings up 12p to 589p, Centrica 6.2p ahead to 334p and Vedanta Resources up 19p to 1061p.

The biggest Footsie fallers were Anglo American down 57p to 1818p, Tesco off 8.8p to 328p, Weir Group 36p lower at 1762p and Capita down 12.5p at 763p.