LONDON REPORT: Stocks resumed their upward progress yesterday, aided by an early rise in Wall Street on the back of better-than-expected US services activity data.

FTSE 250: 4,866.90 (+23.70); FTSE SmallCap: 2,068.6 (+12.6)

The FTSE 100 closed 0.3 per cent higher at 4,126.6, while the mid-cap FTSE 250 added 0.5 per cent at 4,866.9. Volumes were higher than average at 3.1 billion.

Cable & Wireless was the leading faller on the FTSE 100 in early trade, down more than 13 per cent. The telecommunications group said it would exit its loss-making US data services business and suspend dividends for a year. Uncertainty over the timing and the costs of the restructuring unnerved investors initially, but by the close the company was the second-largest gainer on the FTSE 100, up 7 per cent at 103½p.

Xstrata, the Anglo-Swiss mining group, led FTSE 100 fallers down 4.9 per cent at 430p ahead of Friday's vote on its proposed takeover of Australia's MIM Holdings.

Budget airline EasyJet built on Tuesday's 6.3 per cent fall, declining a further 4 per cent to 167¼p on heightened concerns of falling fares and margins in the sector. However, rival Ryanair, which threatened the fare price cuts on Tuesday, added 1.4 per cent at 410p. Flag carrier British Airways rose 3.3 per cent to 150p as it said passenger levels rose 2.1 per cent in May thanks to "post-war pent-up demand".

Dresdner repeated its "reduce" recommendations on Aviva, down 1.7 per cent at 488½p, and Prudential, off 4.5 per cent at 364¼p. Prudential was also hurt by a downbeat note from James Pearce, Deutsche Bank insurance analyst, who reiterated a "sell" rating on the basis that each of the Pru's five main operating units (UK, US, Asia, Egg and M&G) was bedevilled by problems.

Support services group Capita headed blue-chip risers, firming 7.3 per cent to 241¼p, more than reversing Tuesday's 4.5 per cent slide as it said it had purchased one million shares for cancellation.

Kidde, the fire protection group, surged in late trade to close 9.9 per cent higher at 83¼p, on speculation that UTC, which has been linked with security services group Chubb, could be interested in staging a bid.