London close: Footsie hits new five-year high, Sterling slumps

After a subdued start, London's FTSE 100 index finished with decent gains on Wednesday to set a new five-year high with analysts putting the strong performance down to the weaker pound.Sterling slumped today - down 0.82% against the dollar at 1,5534 - after the Bank of England said that inflation would likely stay above its 2.0% target until early 2016. In its three-monthly inflation report, Governor Sir Mervyn King admitted that output has been broadly flat for the last two years, he said the underlying picture is "more encouraging". "The UK economy is set for recovery, that is not to say that the road ahead will be smooth. It hasn't been a normal recession and it won't be normal recovery," he said. Thus, he added that gross domestic product (GDP) growth is "likely to remain below its pre-crisis level until 2015". Senior market analyst Michael Hewson from CMC Markets said today that the FTSE 100 today hit its highest levels since early 2008."These recent gains have no doubt been helped by the current weakness in sterling as investors start to look at the UK index through the same lens as the weak yen, strong NIKKEI trade, helped by the number of companies in the UK index who generate the majority of their earnings in US dollars," he said.In other news, traders were digesting comments made by US President Barack Obama in his State of the Union address last night, in which he said he would push for a bilateral transatlantic trade deal with the European Union "because trade that is free and fair across the Atlantic supports millions of good-paying American jobs"FTSE 100: Tullow and CRH surge in afternoon tradeOil and gas group Tullow rose strongly today after posting a four per cent rise in annual pre-tax profits on the back for strong sales and output. Pre-tax profits in 2012 totalled 1.11bn dollars, ahead of analysts' expectations. Irish building materials group CRH was one of the best performers after President Barack Obama called for more investment in US infrastructure. Boosting the stock further was the news that Irish industrial production rose 8.5% in December, compared with the 0.7% increase across the Eurozone. Furthermore, CRH notified the market that asset management giant BlackRock had increased its stake in the firm to over 5.0% in a transaction over a year ago, buying up 7.0m shares. Mining groups were performing well too, with ENRC, EVRAZ, Xstrata, Fresnillo and Rio Tinto making decent gains. Consumer products giant Reckitt Benckiser managed to narrowly beat consensus expectations with its 2012 results, as a strong performance in the Health & Hygiene division - responsible for brands such as Durex, Gaviscon and Dettol - helped drive growth. Among the worst performers were Sage Group, AstraZeneca, Shell and BP which were all lower after going ex-dividend. Carnival shares also took a hit on reports of serious problems on one of its cruise liners, which is now being slowly dragged to Alabama after losing power following a small on-board fire.FTSE 250: Bumi announces agreement with BakriesBumi plc shares rose after it announced that it has signed an agreement that will allow Indonesia's Bakrie Group to divest its interest in the coal miner. Bakrie will cancel its indirect 23.8% stake in exchange for Bumi plc's 10.3% holding in Asia's biggest thermal coal exporter PT Bumi Resources.Data centre operator Telecity gained after seeing adjusted EBITDA rise 22% in 2012 and saying it enters 2013 with a strong recurring revenue base.African Barrick Gold's shares plunged after saying it was working to reduce costs following a drop in annual net profits. The gold miner reported net profits of $48.2m for 2012 - down from $284.7m the year before. Oil and gas firm SOCO was also a heavy faller despite reporting a whopping 170% increase in production in 2012. Stocks slumped as investors compared this to the 400% growth seen during the first three quarters of the year.FTSE 100 - RisersTullow Oil (TLW) 1,260.00p +6.78%CRH (CRH) 1,420.00p +4.72%Wolseley (WOS) 3,084.00p +3.28%Amec (AMEC) 1,124.00p +3.02%Eurasian Natural Resources Corp. (ENRC) 409.60p +2.99%Rexam (REX) 468.60p +2.67%Glencore International (GLEN) 394.45p +2.60%Admiral Group (ADM) 1,277.00p +2.49%Xstrata (XTA) 1,183.50p +2.47%Vedanta Resources (VED) 1,296.00p +2.45%FTSE 100 - FallersSage Group (SGE) 333.30p -2.88%AstraZeneca (AZN) 2,950.00p -2.27%Carnival (CCL) 2,575.00p -2.02%BP (BP.) 453.60p -1.40%Royal Dutch Shell 'B' (RDSB) 2,186.00p -1.31%Morrison (Wm) Supermarkets (MRW) 259.80p -1.07%Vodafone Group (VOD) 171.65p -1.07%Royal Dutch Shell 'A' (RDSA) 2,140.50p -0.99%IMI (IMI) 1,179.00p -0.84%Aviva (AV.) 364.70p -0.76%FTSE 250 - RisersBumi (BUMI) 444.80p +10.10%Fidessa Group (FDSA) 1,800.00p +8.76%Telecity Group (TCY) 893.50p +8.30%Ferrexpo (FXPO) 290.20p +5.14%New World Resources A Shares (NWR) 304.80p +5.10%Galliford Try (GFRD) 892.00p +4.57%Synthomer (SYNT) 210.00p +4.12%Tullett Prebon (TLPR) 301.50p +3.97%RPS Group (RPS) 240.80p +3.93%Domino Printing Sciences (DNO) 684.00p +3.79%FTSE 250 - FallersAfrican Barrick Gold (ABG) 302.00p -11.44%Britvic (BVIC) 420.00p -8.70%Barr (A.G.) (BAG) 515.50p -7.12%Soco International (SIA) 380.80p -3.96%Ocado Group (OCDO) 132.30p -3.50%UK Commercial Property Trust (UKCM) 68.90p -2.82%Workspace Group (WKP) 337.00p -2.29%Computacenter (CCC) 495.50p -2.27%Big Yellow Group (BYG) 371.50p -1.98%Dunelm Group (DNLM) 773.00p -1.90%BC