Bad news after punters gamble on RSA

THE battered life assurance sector basked in some welcome sunshine, warmed by a strong rise in share markets. With the Footsie continuing to trade well above the key 4000 mark, worries over the life companies' financial health have receded.

The biggest blue-chip gainer was troubled Royal & SunAlliance, one of the biggest speculative gambles on stock market recovery. Highly geared to the performance of the market, it soared 12 1/2p to 107 1/2p. Shares in RSA have collapsed from nearly £5 a year ago. It has cut its dividend and may be forced into a rights issue.

But RSA's rise may be short-lived. After the London market closed, Moody's in New York cast a shadow by revealing that it was considering a possible downgrade to the insurer's credit rating.

Aviva, the former CGNU, charged up 53p to 548p. Prudential improved 44 1/2p to 560 1/2p, Old Mutual firmed 4 1/4p to 82 1/4p and Legal & General lifted 5 1/4p to 127p.

The Footsie soared as high as 174 points ahead, before closing 156.4 points higher at 4327.5, helped by a positive opening on Wall Street. Confidence amongst US investors was given a fillip after chief executives - or most of them, at any rate - certified under oath that their accounts were accurate. Sterling was trading at $1.537. The euro was worth 63.9p and 98.3 US cents.

Also profiting from the rally was Friends Provident, up 8p to 142p, and fund manager Amvescap, up 50p to 435p.

The heavyweight banking, drugs and oils sectors all made gains. Mobile phone giant Vodafone added 5 3/4p to 97 1/2p on a good day for other technology shares.

Accountancy software group Sage improved 12 1/2p to 127p, boosted by solid results from its main rival, Intuit of the US. Broker Schroder Salomon Smith Barney repeated its 'buy' advice on Sage, saying its recent falls - down from £2 in May - were overdone.

South African mining giant Anglo-American dropped 2p to 785p on worries over possible new reporting requirements on HIV/Aids infection rates among its workforce. Under plans being considered by the Johannesburg Stock Exchange, all companies listed in South Africa would have to detail how they are dealing with the disease.

Anglo American has been hammered on concerns among international investors over the South African government's plans to promote black ownership. Merrill Lynch has reduced its target price on the stock from 1500p to 1400p.

British Airways, up 1 3/4p to 140 1/2p, shrugged off news that United Airlines, the second biggest US airline, may have to file for bankruptcy protection. Broker Goldman Sachs says BA is on track to achieve cost cuts earlier than expected.

Music group EMI, dogged by a slowdown in record sales and a dearth of international acts, hit fresh lows, down 7 3/4p to 190 1/2p.

Shares in BPB, the world's biggest plasterboard firm, soared 23p to 298p after it confirmed that it would raise wallboard prices in the US by 15% next month, based on the strength of the housing market. BPB has tumbled from 440p in May.

Builders improved, led by John Laing, up 17 1/2p to 150p. The rumour is that George Wimpey, up 9 1/2p to 290 1/2p, wants to buy its house building division, leaving Laing to concentrate on its infrastructure business. The house building side is estimated to be worth £300m, against Laing's stock market value of £263m.

Food group Uniq jumped 10p to 153 1/2p on completion of the sale of its Shape yoghurt and desserts brand to Groupe Danone of France for £32m cash. Proceeds will be used to reduce borrowings.

Manchester United slipped 2p to 107p after its campaign to qualify for the Champions League got off to a one-nil defeat.

Independent financial advisor Park Row Group surged for the second day running, up 8 1/2p to 46 1/2p after Wednesday's 9p rise. House broker Seymour Pierce says Park Row is 'likely to eventually be bought'. Speculation centres on Dutch financial giant Aegon.