Investors still on edge at FTSE

Carphone Warehouse and Argos owner Home Retail Group fell heavily today after updates from the pair failed to soothe nerves in the retail sector.

Stronger mining and energy stocks meant the FTSE 100 Index jumped 49.1 points to 5772.4 by mid-morning, but this masked further volatility for housebuilders, retailers and banks, including HBOS and Barratt Developments.

Carphone led the Footsie fallers board, down 9% or 19.75p to 208p, after revealing broadband connections in April were hit by the house market slowdown.

Home Retail Group was also punished for a 12% fall in sales at Homebase, even though trading at Argos was better than expected and the company stuck by profit forecasts. Shares dipped 16p to 207.75p, a fall of 7%.

B&Q owner Kingfisher was impacted by Home Retail’s first quarter update, with shares down 5% or 5.7p at 118.5p. BSkyB was down 8.5p to 503.5p and BT Group dipped 4.25p to 207.75p following Carphone’s broadband update.

In the banking sector, the underwriters of the HBOS rights issue were given further cause for alarm after shares initially moved another step away from the company’s 275p discounted offer price. However, shares pulled out of their recent slump to stand 5% higher, up 13.25p at 271.25p.

Barratt Developments also rebounded after Panmure Gordon stockbrokers maintained a buy rating and said the recent slump in the company’s shares defied logic. The FTSE 250 stock, which has dived to a fraction of last year’s value amid fears it will breach banking covenants, rallied 18% or 13.5p to 86p.

Other battered housebuilders were on the front foot, with Taylor Wimpey ahead 8.25p at 60.75p, Redrow 13.25p higher at 147.5p and Bovis Homes ahead 41.25p at 358.25p.

Back in the FTSE 100, Royal Bank of Scotland followed HOBS higher with a gain of 8.75p to 221p, while Xstrata – up 162p to 4197p – led a rally for miners.

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