SURPRISING UK growth figures sent the pound soaring yesterday, but the news failed to offset falls on the FTSE 100 Index.

The 0.8 per cent rise in third-quarter gross domestic product (GDP), based on provisional estimates by the Office for National Statistics, was double the 0.4 per cent expected.

While the pound received an immediate boost, the FTSE retreated into the red – down 44.7 points to 5707.3 – after a decline in US house prices and disappointing earnings from banking firm UBS.

Wall Street’s Dow Jones Industrial Average was also under pressure after a home-price index revealed a 0.1 per cent drop in houses prices in August.

Sentiment was further hit after UBS posted an overall profit in the third quarter of 1.66 billion Swiss francs (£1bn), but its investment bank, which employs 6,300 people at its London headquarters, suffered a loss of £265m.

Sterling jumped more than one per cent against other major currencies following the better-than-expected UK growth figures and after ratings agency Standard and Poor’s revised its outlook on the UK from negative to stable.

The pound reached 1.59 US dollars and 1.14 euros, with yesterday’s GDP data indicating the Bank of England will hold off from taking further emergency action to prop up the economic recovery.

The banking sector saw falls in the wake of the UBS update, with Barclays down 4p to 277.4p, Royal Bank of Scotland off 0.6p to 44.8p and HSBC off 8.4p to 660p.

The biggest faller in London was Cairn Energy after an update on its Greenland exploration activities disappointed investors.

Shares fell seven per cent – off 29.5p to 382.5p.

Other top flight fallers included Arm Holdings, despite better-than-expected third-quarter profit and sales figures. Shares were 23p lower at 366.2p.