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US gives London reasons to be cheerful

The London market pulled out of the red today after positive economic data in the US gave traders a few reasons to be cheerful.

US house prices rose for the third month in a row in July, according to the Case-Shiller index, while a consumer confidence survey also improved this month.

The FTSE 100 Index closed 20.8 points higher at 5859.7 after spending much of the session in red, following a raft of poor data from Asia and continued eurozone worries.

The pound was higher against the US dollar at 1.62 as the greenback gave up some of its gains from earlier this week. Sterling was lower against the euro at 1.25.

The improved figures from the world's largest economy lifted banking stocks with Lloyds Banking Group adding 0.5p to 40.6p and Barclays lifting 2.95p to 223.2p.

However, the ongoing global recession fears kept some mining stocks in the red with Evraz falling 11.5p at 250p and Xstrata dropping 19.8p at 980p.

Other stocks on the back foot included Asia-facing bank Standard Chartered after the Financial Times reported that Singapore investment fund Temasek has sounded out possible buyers for its 18% stake, worth a possible £6 billion. The prospect of a sale caused Standard's shares to decline 23p to 1457.5p.

It was joined on the way down by BAE Systems as the prospect of prolonged political wranglings among European leaders over its £28 billion merger with EADS removed some of the froth over the stock, which fell 6.5p to 328.1p.

Guinness and Smirnoff drinks company Diageo fared better after it said it was in talks about buying a stake in India's United Spirits. Shares were at the top of the FTSE 100 risers board, 30p or 2% higher at 1754p.

Analysts hope the planned transaction will provide Diageo with a strong route to targeting the country's fast-growing and emerging middle classes.

Outside the top flight, shares in Hornby came off the rails in spectacular fashion after it said the London Olympics had failed to deliver the expected boost to sales. With the Scalextric and Corgi owner also facing supplier issues in China, shares slumped by 34%, off 30.3p to 58.3p.

And it was a poor session for pawnbroker Albemarle & Bond after it warned that weakening gold buying volumes and margins would result in lower profits in the current financial year.

Shares slid 12%, off 36p to 260.5p, even though results for the last financial year showed profits rose for the 21st year in a row, up 2% to £21.4 million.

Mining and industrial services firm Hargreaves Services dived 20% after it warned that 105-year-old Maltby Colliery in Rotherham may have to close because of geological difficulties in developing a new coal face.

Chief executive Gordon Banham insisted the company was strong enough to absorb the cost of any closure but shares still fell 143p to 551p.

The biggest Footsie risers were Weir Group up 70p at 1811p, Carnival ahead 76p at 2342p, ARM Holdings up 12.5p at 585p and Hammerson ahead 8.5p at 457.7p.

The biggest Footsie fallers were Evraz down 11.5p at 250p, Eurasian Natural Resources off 8p at 322.6p, Glencore down 7.5p at 346.7p and Xstrata off 19.8p at 980p.

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