MARKETS made their second day of gains this week boosted by positive US housing data.

Loading article content

London's FTSE 100 Index climbed 38.1 points to 6779.3, building on a rise of 52 points in the previous session.

Germany's Dax and France's Cac 40 also advanced, while in New York the Dow Jones Industrial Average was higher at the close of the London market.

US data showed sentiment among home builders improved in August for a third month, applications for building permits in July were strong, while inflation remained subdued.

The news came as foreign ministers involved in talks over the Ukraine crisis reported progress, which also calmed investors. On currency markets, the pound fell a cent against the greenback to just above 1.66 US dollars after annual UK consumer prices index inflation dropped unexpectedly sharply from 1.9 per cent in June to 1.6 per cent in July, dampening expectations of an interest rate hike.

On the old all-items retail prices index measure, UK annual inflation dipped from 2.6 per cent to 2.5 per cent. Sterling was also lower against the single currency, at just under 1.25 euros.

In London, mining giant BHP Billiton was the biggest faller on the FTSE 100 despite posting a rise in earnings and setting out plans to unlock shareholder value by spinning off a new company featuring its aluminium, coal, manganese, nickel and silver assets.

The plan was revealed at the same time as the Anglo-Australian company posted a 10 percent rise in underlying profit to 13.45 billion US dollars (£8.08 billion) for the year to the end of June.

But shares fell 102p, to 1965p, in the absence of any plan being outlined by the group to return cash to investors via an anticipated share buy-back of three billion US dollars (£1.8 billion).

Housebuilders moved in the opposite direction as Persimmon reported a 57 percent rise in half-year profits to £212.9 million and said that forward sales since the end of July were running at £1.53 billion, 22 percent ahead of the same period in 2013. Persimmon shares were up 15p at 1350p, but the biggest gains among housebuilders were felt at FTSE 100 rival Barratt Developments with a gain of 10.4p to 368.6p.

In the FTSE 250, shares in housebuilder Redrow lifted 8.2p to 268.2p.

Meanwhile, traders cheered a first-half trading update by energy services firm Wood Group, as it posted a 14.7 percent rise in profits before tax and exceptional items to 182.4 million US dollars (£109.6 million) and raised its interim dividend by 25 percent. Shares climbed five percent, or 37p, to 788.5p.

The biggest risers on the FTSE 100 Index were Kingfisher up 11.2p at 310.6p and Sports Direct International up 23.5p at 726.5p. The biggest fallers were BHP Billiton down 102p at 1965p and Fresnillo down 30p at 973p,