LONDON REPORT: FTSE:5,943.85 (+47.60) Mid-250:11,573.44 (+40.75) Small Cap:3,282.08 (+4.02)

UK STOCKS rose in London yesterday, extending gains as investors speculated that US government reports this week may show faster growth in the world’s largest economy.

FTSE 100 gained 47.6, or 0.8 per cent, to 5,943.85 at the close in London, trimming last week’s decline. The gauge has rallied 67 per cent since March 2009 amid measures from governments and central banks to restart economic growth.

The FTSE All-Share Index climbed 0.7 per cent yesterday.

“The traditionally more defensive stocks such as Diageo and British American Tobacco are leading gainers – reflecting a perhaps more cautious tone among investors ahead of a week that sees the latest GDP data from the UK and US.

A report that is due out today may show the US Conference Board’s confidence index rose to 54.2 in January from 52.5 in December, according to a Bloomberg survey.

Gross domestic product climbed at a 3.5 per cent annual pace last quarter.

Diageo, the world’s biggest distiller, gained 1.4 per cent to 1,221p. Distillers’ prospects for 2011 are “more positive” than those of other drinks makers, Exane BNP Paribas said.

British American Tobacco,east Africa’s biggest cigarette maker, gained 4 per cent to 2,373p.

Northern Foods surged 17 per cent to 74p. Greencore said it “recognises the importance attached by the Northern Foods board to the certainty of cash value in their decision to change their recommendation” on its merger offer. Northern Foods accepted a £341 million cash offer from Ranjit Boparan on January 21st.

Invensys dropped 2.9 per cent to 325.4p after being cut to “neutral” from “buy” at Goldman Sachs. The British maker of controls for Whirlpool washing machines announced “softening” fourth-quarter demand in North America lead to a decline in sales.

Bank stocks declined following reports at the weekend of the government-sponsored Independent Commission on Banking’s examination of whether to break-up the banks in the wake of the global financial crisis.

Royal Bank of Scotland lost 1.9 per cent to 44.08p.

Lloyds Banking dropped 3.4 per cent to 65.05p.

Whitbread gained 3.1 per cent to 1,773p. – (Bloomberg)