Market report: Tuesday close

SHARES pushed on to new two-year highs today, shrugging off mixed news from the High Street and expectations of a US interest rate rise later today.

The FTSE 100 index was up 28.9 to 4608.4 at the close, having breached the 4600 barrier just after the open.

Expectations of a quarter-point rise in US rates to 1.75% were factored in, observers suggested. More important, said Kevin Gardiner, head strategist at HSBC, will be the picture painted by US corporate earnings in the next few weeks.

'This should confirm that US earnings growth is slowing down from a fairly brisk pace,' he said, predicting the Footsie will end the year at around 4700.

In the US, indices edged up ahead of the rate decision, as major Wall Street investment banks Goldman Sachs and Lehman Brothers rose on better-than-expected quarterly profits.

The Dow Jones industrial average was up 6.79 points at 10,211.68 at lunchtime and the Nasdaq was up 4.91 points at 1,912.98.

Even dire news from Marks & Spencer could not dampen the enthusiasm. It revealed a 332p-to-380p share range for its £2.3bn tender offer, but that was offset by a very badly received trading statement.

The shares were among the biggest FTSE 100 fallers, slumping 4p to 341 1/2p. J Sainsbury slipped 2 1/4p to 272 1/2p as Panmure Gordon halved profit forecasts and set a 200p target.

The contrast with Tesco could not have been starker. Sparkling figures which beat even the most optimistic expectations, backed by a 10% rise in the interim dividend to 2.29p, sent its shares 9 3/4p higher to 285p, putting them among the top Footsie risers.

Meantime, CSFB questioned the logic of accepting Baugur's likely 110p a share offer for Big Food Group , suggesting it undervalued the frozen food to cash-and-carry company. The shares were 1/4p down at 98 1/4p..

Ahead of its big strategy presentation, Shell was on message for once, rising 9 3/4p to 432 1/4p, although Goldman Sachs expects no 'rabbits out of hats' tomorrow.

BP was back in the market for its own shares, pushing its price 9 1/2p higher to 538p.

The clearers were in good form, buoyed by a general recommendation by Goldman. Highlights included Barclays, ahead 10 1/2p at 541 1/2p on a buy recommendation from Merrill Lynch and Royal Bank of Scotland, where Dresdner Kleinwort Wasserstein reiterated its buy advice, with a target of 2100p. The shares gained 18p to 1583p.

Unilever managed a modest recovery. The Ben & Jerry's ice cream group edged up 8p to 467 1/2p, even though UBS lowered its target from 560p to 500p, while Goldman slashed its earnings expectations.

LogicaCMG succumbed to a downgrade from CSFB, falling 7 3/4p to 184p, as the broker pointed out the IT group may be constrained by its balance sheet.

Crest Nicholson was also under the cosh as UBS put a neutral tag on the shares, down 6p at 359p, from buy. Meanwhile, football strips maker Umbro was marked down 5p to 110p after it said Glasgow Celtic would not extend its sponsorship deal beyond next June.

Investec, ahead 22p to 1111p, was a strong market ahead of an investor briefing tomorrow. But British Energy slipped 2 1/2p to 19 1/2p as it announced it had applied for a US injunction to see off its troublesome shareholder Polygon Investment Partners.

The dip in profits unveiled by Highland Gold Mining took it 21p lower to 244p. Creative Recruitment Solutions said it was toying with receivership and its Alternative Investment Market-listed shares, last quoted at 1 1/2p, were suspended. IT hardware group Scipher also asked for a suspension. The shares last traded at 1.125p.