City cheers as BP's Tony Hayward heads for exit

EMBATTLED oil giant BP soared 5 per cent yesterday as investors cheered the prospect of a change at the top ahead of Tony Hayward's expected departure.

The group was one of the biggest risers on the FTSE 100 Index, which closed 38.5 points higher at 5,351.12.

The Footsie was given late-session momentum after the Dow Jones Industrial Average on Wall Street rose following an earnings upgrade from FedEx and positive new US homes sales data.

BP was in the limelight on both sides of the Atlantic, as the group told the City that "no final decision" had been made on Hayward's future as it prepared for last night's board meeting.

Speculation linked American managing director Bob Dudley to the chief executive post and BP shares were 18.4p higher at 417p as investors hoped the appointment would help the company move forward after the oil spill disaster.

But the firm's second-quarter results today are likely to make for painful reading, revealing provisions running into tens of billions of pounds for the Gulf of Mexico spill.

Banks also dominated the blue-chip risers board after the UK's "big four" - Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland - emerged unscathed from Friday's European stress test result.

Barclays rose 13.7p to 315.7p, Lloyds lifted 2.5p to 66p and RBS added 1.3p to 46.7p.

The stress test results helped boost confidence in the UK and the pound, with sterling hitting a three month high against the dollar at one stage today, up 0.3 per cent to $1.55.

Other risers in the top flight included Financial Times and Penguin owner Pearson after it upgraded its outlook for 2010 on the back of better-than-expected half-year results.

Figures were helped by a strong performance in educational publishing, while its FT operation saw a return to advertising revenue growth in the first half. Shares were 6 per cent higher, up 56p to 1,029p.

But further progress on the FTSE 100 was held back by declines amid mining stocks and drug firms.

GlaxoSmithKline fell 15p to 1,172p after a report at the weekend suggested the firm was interested in a takeover of struggling US biotechnology company Genzyme.

Fellow drugmaker AstraZeneca was also lower, down 20.5p at 3,126p ahead of its half-year results later this week.

Among miners in the red, silver group Fresnillo was one of the worst hit, down 28p at 1,063p.

Household goods giant Reckitt Benckiser was another faller, down 3p at 3,333p, after revealing its first ever quarter-on-quarter drop in underlying sales in Europe.

Outside the top flight, there was a further slump for social housing firm Connaught after it revealed it will breach its banking covenants. The firm is in talks with lenders about securing additional funding, which it said is urgently required to meet its needs. Shares dived 69 per cent or 70.6p to 31.5p.

A pair of Scottish oil companies went in opposite directions after drilling began on an exploration well in which they both hold stakes. Takeover target Dana was down 16p at 1,690p while Faroe was up 1p at 163p.