Footsie claws back from dramatic fall

The FTSE 100 Index continued to show some of its new found resilience today after clawing back from a dramatic 98.5 point fall.

Despite continued uncertainty over Iraq and the global economy, the Footsie managed to close down just 6.2 points at 3483.6.

Strong gains by some of the market’s biggest stocks, oil giants BP and Shell and pharmaceutical group GlaxoSmithKline drove the recovery.

Traders said the fightback was encouraging and could spell an upturn in fortunes over the remaining two days of the week.

Tom Hougaard of bookies City Index said: “People are going to be disappointed we didn’t close up but it could have been far far worse.”

After little over an hour the Footsie was at 3391.5 on fears about Iraq and signs of a heavy fall in early trading on Wall Street.

But as the Dow Jones Industrial Average steadied after opening in the US, markets across Europe showed signs of life with bargain hunters moving in.

BP and Shell were among those to have fallen sharply in recent weeks and both surged, with BP up by 6% or 20.5p to 383p and Shell up 9.5p at 363p.

In the drugs sector, GlaxoSmithKline was 50p higher at 1100p and AstraZeneca moved 86p above its lowest price for five months and closed at 1922p.

Even the insurers were performing relatively well with Prudential up 2.75p at 356.75p and Norwich Union-owner Aviva ahead 6p at 373p.

Their gains came in stark contrast to FTSE 250 rival Britannic which closed down 12%, or 14p at 101p, after a torrid day.

The group recovered from an earlier 29% drop after reassuring it was not at risk of breaching its minimum margin of solvency.

Telecoms were among those falling back with mobile phone giant Vodafone down 5.5p at 106.75p, mmO2 down 1p at 46.5p and BT Group down 4.75p at 167.25p.

Another faller was British Airways, which slid a hefty 4%, or 4.75p to 105.25p, on concerns about the impact war with Iraq could have on its business.

Energy group Scottish Power was another on the slide, off 5%, or 15.75p to 330.75p, while National Grid Transco dropped 16p to 384p.

Among the banks, Barclays fell 5.5p at 328.75p, Lloyds TSB dropped 4.5p to 370.5p, HSBC fell 9.5p to 631.5p and HBOS eased 11p to 538p.

It was a better day, however, for Northern Rock which gained 10p to 578p after kicking off the banking reporting season with an 18% jump in full-year profits.

Among other smaller stocks, retailer WH Smith tumbled 4%, off 12.25p to 284p, after disappointing the market with a poor Christmas trading update.

Heavy discounting by the group’s high street rivals saw like-for-like sales at WH Smith fall 3% over the festive period.

The biggest Footsie risers were BP, up 20.5p at 383p, GlaxoSmithKline, ahead 50p at 1100p, AstraZeneca, up 86p at 1922p, and Capita, ahead 7p at 194p.

The heaviest fallers were Reuters, down 12p at 169p, Vodafone, down 5.5p at 106.75p, Scottish Power, off 15.75p at 330.75p and British Airways, off 4.75p at 105.25p.