Late dip sees FTSE move into red

The London market took a late dive into the red today as opening nerves on Wall Street undermined blue-chip stocks.

A fragile FTSE 100 Index was in positive territory for much of the session, but followed the Dow Jones Industrial Average lower as US traders were spooked by a gloomy update from General Motors.

The Footsie eventually closed more than 1%, or 52.9 points, down at 4313.8. This was its lowest close since August 2004 after a 5% tumble yesterday.

The losses came despite a bright start to trading given by gains in Asian markets. But sentiment weakened later as the International Monetary Fund's chief warned the world was on the "cusp" of recession.

The economic woes also continued in Iceland, as more banking turmoil saw trading on the country's stock market suspended until Monday.

In London, HBOS and Royal Bank of Scotland continued to recover lost ground with miners also enjoying some gains.

HBOS was the top Footsie riser, up 31%, or 36.5p to 153.5p, with its proposed merger partner Lloyds TSB up 1.75p to 211.75p.

NatWest owner RBS cheered 6%, or 5.3p to 96p, but Barclays - which fell heavily yesterday - was today's leading Footsie faller.

Barclays shed 36.5p to 241.75p, or 13% on speculation it will seek to tap shareholders rather than the Government to strengthen its balance sheet.

All the banks will be able to tap the Government for billions of pounds of extra capital if they need it under the massive bail-out scheme announced yesterday.

HSBC was named as one of the initial eight eligible to take part but has no plans to do so, and later announced plans to pump £750m (€946.2m) of its own cash into its UK subsidiary. Shares fell 18.25p to 860p.

Elsewhere in the financial sector, Norwich Union owner Aviva rose after it said its surplus regulatory capital rose in the third quarter despite the fall in stock markets. Shares lifted 24.25p to 434p, a gain of 6%, as Aviva also said increased hedging had reinforced its buffer against further falls.

Sainsbury's also put back some of the losses seen yesterday after tycoon Robert Tchenguiz's forced sale of a 10% stake in the company. Broker upgrades after a trading update yesterday also helped shares rise 0.25p to 268p.

Miners offered the wider market some support, with Eurasian Natural Resources leading the way, ahead 71p at 521p.

Elsewhere, FTSE 250 Index retailer WH Smith was up 8% after a 15% hike in underlying profits was accompanied by a resilient note on current trading. Shares rose 25p to 345p.

But shares in convenience food chain Greggs were 217p lower at 3209p after it cut full year profit forecasts by £3m (€3.8m).

The Footsie's four biggest risers were HBOS, up 36.5p to 153.5p, Cairn Energy up 248p to 1609p, Eurasian Natural Resources up 71p to 521p and Antofagasta which closed up 30.5p at 332p.

The four biggest fallers were Barclays down 36.5p to 241.75p, National Grid down 55p to 610p, United Utilities down 47p to 577p, and International Power which ended the day down 20.25p at 273p.

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