FTSE loses ground

Gains for banking giant Barclays failed to keep the London market from slipping into the red today.

A reassuring trading update and confirmation that the firm was looking at plans for a share issue which could raise £4bn (€5bn) from sovereign wealth funds lifted shares as much as 13%.

However, the FTSE 100 Index was 12.9 points lower at 5789.9 by the mid-session as downgrades for consumer giants such as Unilever and a poor day for telecoms stocks weighed.

The top flight traded in a narrow range as investors awaited direction this afternoon from US markets, where results from investment bank Lehman Brothers should set the tone. Futures markets were showing early losses on Wall Street.

In London, Barclays was later 5% or 15.25p higher at 333.25p, losing some of its earlier gains. But its update put many peers on the front foot as Alliance & Leicester lifted 8p to 346.75p and Halifax Bank of Scotland, due to update on trading in its right issue prospectus this week, cheered 1.5p to 322.75p.

HBOS's gains came on top of the 13% rise seen on Friday after the City watchdog proposed new rules on short selling during rights issues.

Among the fallers however Flora food giant Unilever bore the brunt of a downgrade from UBS on concerns over the European food sector. Shares were down 4%, or 65p, to 1508p, while Cadbury - also marked down by UBS - fell 16.5p to 635.5p.

Investors also moved their money out of the telecoms sector today with heavyweight Vodafone falling 2%, or 3.1p to 150p. BT slipped 4.25p to 212.25p, while Cable & Wireless was 2.9p lower at 153.3p.

Housebuilders meanwhile were on firmer ground amid speculation that Britain's biggest institutional investors have been working on plans to provide direct funding to shore up firms in the sector.

Persimmon jumped nearly 5%, or 20p to 431.5p, while in the FTSE 250 Index Barratt Developments was 11p higher at 97.5p, a gain of 13%. Taylor Wimpey added 6.5p to 77p in the second tier.

Back in the top flight, miners offered some support as commodity prices nudged up. Eurasian Natural Resources was the sector's biggest riser after an ABN Amro upgrade pushed it nearly 7% or 90p to 1411p.

British Airways was the Footsie's biggest faller after oil prices rose despite Saudi Arabia announcing it was upping its production by 200,000 barrels a day from next month. Shares in the airline were down 11.25p to 239.25p.

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