Barclays news slows FTSE downturn

Reassuring news from banking giant Barclays and stronger-than-expected early trading on Wall Street helped limit falls on the London market today.

The FTSE 100 Index recovered from a fall of more than 80 points at one stage, later closing down 39.8 points, at 6140.7.

The blue chip index reacted with to a rally on the Dow Jones Industrial Average, which soared by nearly 200 points after news of a $7.5bn (€5bn) investment in Citigroup by the Abu Dhabi Investment Authority.

Banks were also on the front foot in London, with an encouraging trading update from Barclays cheering the sector.

Shares in Barclays rose 5%, up 27p at 524p, after the bank said it would meet profit expectations, offsetting concerns about the impact of financial market turmoil.

There was encouragement for other financial stocks after the bank said it had not seen a deterioration in the amount of money set aside for bad debts.

Halifax Bank of Scotland added 21.5p to 764p, while Royal Bank of Scotland gained 9.25p to 422.25p.

Crisis-hit Northern Rock rallied a further 8.6p to 118.7p after the mortgage lender's biggest shareholder RAB Capital called for a bigger offer than the one on the table from a Virgin-led consortium.

But HSBC, the UK's biggest bank, suffered a 1% fall of 8.5p to 803p after another rise in the interbank lending rate signalled more credit crunch concerns.

Heavily-weighted miners also held back blue chips on lower copper prices, with Vedanta Resources off 81p at 1975p and Antofagasta down 26.5p to 658.5p.

Retailers meanwhile were on the back foot following a profits warning from jewellery retailer Signet, down 17%, or 13p to 64p.

Argos parent Home Retail Group responded with a fall of 16.25p to 340.25p, with Next also down, off 68p at 1709p and Marks & Spencer 17p lower at 597p.

One of the Footsie's biggest fallers was catering group Compass, down nearly 3%, or 8.25p at 289.25p despite expectations that full-year results tomorrow will show a 18% rise in pre-tax profits to £429m (€598m) on a year earlier.

Housebuilders suffered more jitters over prospects for the market next year with Taylor Wimpey down 7.6p at 190.5p.

But water company Severn Trent rose after half-year underlying profits of £161.5m (€225.1m) came in ahead of market expectations. Shares responded with a rise of 45p to 1507p.

In the second tier, bank note printing firm De La Rue was the top riser on good numbers and a strategic review of the business which may lead to disposals. Shares rose 69p to 850p.

But car dealership Pendragon was the FTSE 250's leading faller after warning of the impact of competitive pricing for new cars on the second-hand market. Pendragon slumped 35%, or 18.75p, to 35.5p.

The biggest Footsie risers were Northern Rock, up 8.6p at 118.7p, Barclays ahead 27p at 524p, Man Group up 19.5p at 530p and Severn Trent up 45p at 1507p.

The biggest Footsie fallers were Icap down 34.5p at 632.5p, Home Retail Group down 16.25p at 340.25p, Sage Group down 8.8p at 193.7p and Vedanta Resources off 81p at 1975p.