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Good news from US adds £10bn to Footsie

Around £10.8 billion was added to the value of UK blue chips yesterday as London's FTSE-100 index leapt to its highest level for nearly two years.

Encouraging US job figures helped overshadow fears over the UK economy, sending the top flight another 42.50 points higher to 6089.84 – a level not seen since February 2011.

The Dow Jones industrial average on Wall Street also edged higher in early trade after a report showed US employers added 155,000 jobs last month, while hiring was stronger in November than first thought.

Investors were cheered by the news of solid US jobs growth, even though it failed to bring the rate of US unemployment down from 7.8%.

The Footsie smashed through the 6000-point barrier on Tuesday after America secured a last-minute deal to avoid devastating fiscal cliff measures of tax hikes and spending cuts.

Yesterday's gains came despite early session falls after minutes of the most recent Federal Reserve meeting showed policymakers were divided over how long the central bank should keep buying bonds to support the economy.

The UK economic climate was also in the spotlight after figures suggested the powerhouse ser-vices sector shrank last month for the first time in two years.

The Markit/CIPS purchasing managers' index (PMI) survey showed a reading of 48.9 in December, down from 50.2 in November and below the 50 mark separating growth from contraction.

The pound dropped on the services sector gloom, hit also by a stronger dollar on expectations for less bond buying in the US. Sterling fell to 1.60 dollars and just below 1.23 euros.

The stagnant economic picture did little for confidence in mining stocks as Randgold Resources dropped 255p to 5975p and silver miner Fresnillo slipped 75p to 1810p. But gains from blue-chip heavyweights Vodafone, BP and GlaxoSmith-Kline helped the top flight.

BP was top of the Footsie risers' board, up 11.8p to 453.5p, after the owner of the Deep-water Horizon drilling rig that exploded in 2010 killing 11 people shared some of the responsibility for the disaster.

The oil giant agreed a £2.8bn settlement with US authorities over criminal charges for the disaster and Transocean said it would pay $1.4bn to settle all civil and criminal claims.

Meanwhile, retailers were on the back foot ahead of a busy week of Christmas updates.

Marks & Spencer fell 12p to 376.4p, while Sainsbury's and Tesco were down 2.8p to 333.8p and 0.6p to 349.5p respectively.

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