London shares staged a late rally yesterday after fears about an interest rate rise had prompted a bout of profit-taking.

After spending much of the day in the red, the FTSE 100 Index closed 9.2 up at 4390.6.

The Footsie managed to reach positive territory on the back of an unexpected early surge by the Dow Jones Industrial Average, which rose 22 points before falling to stand 4.7 down by London's close.

The prospect of the Bank of England raising interest rates kept investors in a cautious mood for much of the day.

But traders said most of the profit-taking was over and the market had begun to factor in the impact of any rate rise.

The heaviest faller in London was gases group BOC, despite announcing positive first quarter results. The stock, which has benefited from strong gains recently, fell nearly three per cent, or 23p, to 871p.

A trader said BOC had had a good run and would struggle to justify a move above the 900p mark.

It was followed by BAE Systems, down 3p at 162p, after Boeing's new chief executive Harry Stonecipher said his company was not interested in acquiring the UK-based defence company.

Other aerospace groups were also down, with Rolls-Royce weakening 3p to 183p and GKN off 1p at 257p.

Insurer Royal and Sun All-iance was another faller, although the impact of a cautious broker note was limited to a decline of p to 97p. Norwich Union owner Aviva also slipped, easing 6p to 512p. However, rival Prudential ended the day on an upbeat note, gaining p to 479p

Among Footsie companies making advances, cigarette group Imperial Tobacco rose 27p to 1132p after encouraging investors with talk of a stable performance.

There was also a gain of 5p to 528p for airports operator BAA as shareholders continued to cheer Monday's third quarter results.

Elsewhere, media group ITV struggled to build on Monday's debut, with shares down p to 147p.

Industry counterpart Chrys-alis provided some cheer for advertisers, pledging to turn up the heat on rivals after seeing revenues from its radio division jump by 19 per cent. However, investors failed to warm to the news, sending the group's shares down 1p to 243p.

The home furnishings sector was in focus, with a downbeat trading statement from DFS and more bullish comments from Carpetright causing shares to fall 6p to 364p and 8p to 892p respectively.