THE FTSE 100 index rallied yesterday as a better-thanexpected opening on Wall Street gave a late boost.

The rise came despite another hammering for BT after the firm slashed its dividend by nearly 60 per cent and announced annual losses of £134m.

US markets caused a late surge in London, with the FTSE up 31.2 points at 4362.6 – reversing a week of profit-taking.

BT warned that the turnaround of its ailing global services division will result in more one-off costs in the next two financial years. Shares were down more than six per cent or 6p at 88.4p.

Holiday firm Thomas Cook led the fallers with a drop of more than seven per cent, or 18p to 228.25p, despite producing half-year results in line with expectations.

Revenues were up 12.6 per cent to £3.48bn.

Rival TUI Travel moved in the opposite direction, up 12.5p to 254.75p. British Airways shares rose four per cent in the wake of comments by Virgin Atlantic boss Sir Richard Branson, who said it would be “disastrous” for passengers if the proposed linkup between BA and US carrier American Airlines is allowed to go ahead.

Shares rose 6.6p to 160p.

Banks pulled out of a recent slump as investors looked beyond the previous day’s report suggesting a slower than expected resumption of lending.

The mood was helped by Morgan Stanley’s decision to upgrade its rating on Barclays, which rose 10.25p to 253p, or four per cent. It was followed by Royal Bank of Scotland, which rose 1.5p to 39.5p, and Lloyds Banking Group, up 3.2p to 87.8p.

Other blue-chip gainers included construction firm Balfour Beatty. Shares rose 12p to 348.75p.

Outside the top flight, ITV was in the red – sliding 1.5p to 31p – after it outlined plans to strip out another £40m in cost savings.

It announced 600 job losses earlier this year.