London market stages recovery

The London market managed to pull back above the 4,100 mark today, as telecom and banking stocks posted steady gains.

Battered blue-chip heavyweights crept forward in quiet trading as investors sought out a few bargains among the carnage of the past week.

By lunchtime, the FTSE 100 Index had bounced 91.5 points to 4113.4 and was close to its high point of the session.

Signs of a stronger opening on Wall Street later today also helped to steady nerves after another fall on the Dow Jones Industrial Average last night.

The Dow Jones ended 166 points lower causing a 55-point fall in the first ten minutes of trading in London today.

Martin Dobson, head dealer at NatWest Stockbrokers, said the recovery in the City was mainly down to short-term investments.

He added: ‘‘People are looking to trade stocks on the up and then take their profit. The bears still have the pull on the market at the moment.’’

Among the risers today were mobile phone giant Vodafone, which moved up 6%, or 5½p to 97p while rival mmO2 edged ahead 1¼p to 46p and Cable & Wireless rose 3¼p to 167¼.

Telecoms were helped by a good performance from the sector in Europe - led by Deutsche Telekom which gained on the back of cost cuts promised after yesterday’s departure of its chief executive.

Among the banks climbing higher, Royal Bank of Scotland was up over 5%, or 75p to £15.56 while Barclays rose by 19p to 451½p.

HSBC was up 15p to 712p, HBOS moved ahead 39½p to 596½p, Abbey National rose 24½p to 712p and Lloyds TSB climbed 25½p to 583½p.

British Gas group Centrica was also rebounding and was up 8%, a climb of 11¾p to 167¼p, after its reassurance yesterday over accounting procedures.

And news of further fare reductions by British Airways seemed to be welcomed in the City as its shares took off 8%, up 11¾p to 159p.

Chocolate-to-fizzy drinks group Cadbury Schweppes reversed an early fall to gain 4%, up 16p to 441p. The group today served up interim results in line with City expectations.

However, Anglo-Dutch steelmaker Corus slipped 4%, or 3p to 69½p, after revealing plans to merge with Brazil’s CSN in an all-share deal.

Analysts said the shares were down in reaction to the large premium the group is paying for CSN - a 54% premium on its share price on Monday.

Among smaller stocks, football club Leicester City slumped 38%, off 5p to 8p, after warning it was having cashflow problems.

The group is in talks with shareholders with a view to raising fresh capital, and is also considering further player sales.