Around the World's Markets: London

HOPES OF lower interest rates helped the FTSE 100 to recover from a poor start. It closed 13.1 up at 5,281.7 as underlying inflation fell to the Government's 2.5 per cent target for the first time since January. Supporting stocks, however, remained depressed.

The brewer, Whitbread, became the latest casualty of worries about a slowdown in consumer spending, slumping 53p to 771p. ICI collapsed 35p to 520p as Merrill Lynch cut its profit forecast to pounds 320m. The group made pounds 518m last time.