Wall Street rallies as big guns deliver

BETTER-than-expected first-quarter earnings statements from heavyweights Texas Instruments and General Motors lit the fuse on Wall Street.

The Dow Jones soared in early trading as investors took the view that the US economic recovery is well on track. Even rumours that veteran Federal Reserve chairman Alan Greenspan would retire did not upset the party. London's FTSE 100 rose 58.5 points to 5259.9 in sympathy.

The prospect of higher interest rates receded further as new figures showed inflationary pressures on both sides of the Atlantic well under control. Broker Bear Stearns believes higher Fed rates will not come until September although the market consensus is still that 26 June will see the first hike. Canada lifted rates 0.25% to 2.25% last night.

The highly-respected Greenspan is due to give his testimony to the Joint Economic Committee today. Speculation on his retirement is growing. Markets worldwide will hang on his every word, waiting for clues on interest rates ahead of the next FOMC meeting on 7 May.

Back in the UK, dealers will be homing in on Chancellor Gordon Brown's Budget speech. Economists expect tax rises of about £5bn and some fear the burden will fall on the consumer sector. Sterling edged up to $1.439 and the euro to 61.3p.

Telecoms recovered more lost ground. mmO2 rose 3 1/2p to 57p after announcing plans to save £367m over five years by cutting the number of its suppliers.

Vodafone retrieved 7p more to 122 3/4p on turnover of 423m shares. Broker ING advised clients to buy at 111p saying the recent underperformance was unjustified. Vodafone has global reach and diversity, low and manageable debt, high and improving margins, and best in class operating statistics. Cable & Wireless firmed 9p to 211p, BT Group 7p to 263 1/2p. Recovery hopes lifted Colt 3 1/4p to 47p.

Kewill Systems soared 12 1/2p to 28 1/2p after restoring some faith by stating it expects to break even at the operating level in the second half on higher sales of electronic commerce software.

Aim-listed Transense Technologies jumped 72 1/2p to 230p. Chairman Sir Dominic Cadbury bought 10,000 at 195p after TT signed a licence agreement with Honeywell. Software and computer services group Marlborough Stirling fell 14p to 186p. Dealers heard rumours that broker UBS Warburg was struggling to place its near-5% stake, even at a sizable discount.

DCS Group improved 3p to 27p after finance director Colin Campbell bought 60,000 shares at 24p. Aegis, the buyer of advertising time, softened 2 1/2p to 116 1/4p. To pay off debt, it is launching e150m of senior unsecured convertible bonds due 2006, and convertible into ordinary shares.

Computer games developer and publisher Sci Entertainment lost an early gain of 4 1/2p to finish 2 1/2p off at 60p. Dealers were surprised at the late reaction because it is confident it will report profits in the first six months of the year to March. The second half should be much stronger and analysts expect a rerating.

Gullane Entertainment rose 6p to 355p after winning new deals for its leading brands Thomas the Tank Engine and Guinness World Records. Revenues from the deals should be about £3m over two years. Gullane is signing with Discovery Latin America to broadcast Thomas's adventures in Spanish and Portuguese. It also sold rights to broadcast 130 Thomas episodes and 78 new ones to children's cable channel Nickelodeon in the UK.

Aim-listed IFTE, which runs simulators to train firefighters, advanced 9 1/2p to 125p. Its US subsidiary Symtron Systems has won five contracts worth £2.46m. Aspinall Online edged forward to 0.97p after announcing plans to outsource its casino operations to Golden Palace, which is licensed by Antigua and the Mohawk territory of Kahnawake in Canada.

Health club group Esporta was sold down to 64 1/2p on news that bid talks have been terminated, but rallied to finish unaltered at 71p. The company said trading in January and February was ahead of expectations and the trend continued in March.