FTSE closes at 6486.4

The FTSE 100 Index closed 53.4 points higher at 6486.4 - despite fresh news of tumbling housing sales in the US, as markets weighed up another possible rate cut from the US Federal Reserve.

Alliance & Leicester topped the leader's board, up more than 8 per cent, or 62p, to 795p after broker comment that the shares looked cheap following the recent financial turmoil.

Crisis-hit Northern Rock was also 11.5p higher at 193.5p on talk that private equity firms JC Flowers and Cerberus had been given access to its books and a Spanish investor had made an offer for 10 per cent of the business.

Fellow lender Halifax Bank of Scotland rose 43p to 916p while FTSE 250 stock Bradford & Bingley - also a UBS pick - was up 18.75p at 310p.

In the top flight, housebuilders were firmly among the FTSE risers after an upbeat note from Citi analysts on Barratt Developments soothed market concerns over the effect of the Northern Rock crisis on its sales.

Barratt rose 27p to 753p, Persimmon saw a 43p hike to 953p and Taylor Wimpey surged 17p to 275p.

Meanwhile flagship carrier British Airways' shares took off after it placed its largest order for new planes for nearly ten years.

Shares rose more than 4 per cent, or 15.25p, to 384.25p. Rolls-Royce, which will power the 12 Airbus 380s and 24 Boeing 787 Dreamliners on order, also felt the benefit, up 3p at 524p.

Among retailers, Marks & Spencer gained 4 per cent, or 24p, to 612.5p after rumours of a bid in the offing.

The wider sector also made progress as a CBI survey showed September sales above the average levels seen last year.

But other blue-chips underwhelmed investors with corporate updates. Foods group Compass was the leading faller despite predicting results at the top end of expectations, sending the shares down 3 per cent, or 9.5p, to 310.75p.

Pubs operator Mitchells & Butlers was another disappointment to investors, falling 8p to 610p.

Other stocks on the back foot included insurer Resolution, which slipped back 10.5p to 684.5p on reports that rival Pearl could launch an all-cash bid at a discount to the current price - potentially scuppering Resolution's planned merger with Friends Provident.

Winners: Alliance & Leicester up 62p at 795p, Taylor Wimpey ahead 17p at 275p, Northern Rock up 11.5p at 193.5p and Standard Life ahead 291.25p at 16.25p.

Losers: Compass off 9.5p at 310.75p, Vedanta Resources down 52p at 2057p, Tullow Oil off 11.5p at 585p and Kazakhmys down 25p at 1455p.

© Independent Television News Limited 2007. All rights reserved.