Traders hoping for London rally

The City was today hoping that the London stock market would continue its fightback.

The City was today hoping that the London stock market would continue its fightback.

Bargain hunters yesterday helped pull the fragile FTSE 100 Index off its knees. After diving by almost 100 points in a frantic first hour, the Footsie closed down just 6.2 points at 3483.8.

Analysts now believe that while confidence is still wafer thin, a rally could be around the corner.

Tom Hougaard of spread betters City Index said: “We fell sharply early on but we recovered and that is good news.

“People are going to be disappointed we didn’t close up but it could have been far, far worse.”

Oil groups BP and Shell and drugs giants GlaxoSmithKline and AstraZeneca were among those climbing higher.

All four have been battered by the Footsie’s recent record-breaking run to a seven-and-a-half year low.

The index, which tracks Britain’s biggest 100 firms, only closed up for the first time in 12 days on Tuesday.

Fear and uncertainty over Iraq, international terrorism, and the global economy have all hit investors’ morale.

The Footsie plunged yesterday to below 3,400 as dealers forecast a poor start to trading on Wall Street.

But as New York’s Dow Jones Industrial Average recovered from early falls in the afternoon, the City took heart.

And it started today above the key 3,475 mark – half its value of 6,950 recorded in December 1999.

Mr Hougaard said: “If US markets can hold on then we can be more optimistic about the rest of the week.”

BP jumped nearly 6% while Shell gained 3% and AstraZeneca and GlaxoSmithKline both rose 5%.

But falls among blue-chip telecoms and banking stocks showed some investors still had the jitters.

Vodafone fell almost 5% to its lowest level since November while Abbey National dropped another 3%.

And British Airways lost 4% on fears of the impact a war with Iraq would have on its business.

The airline, which only regained its place in the Footsie last month, is now at three-month lows.

Struggling insurance giant Britannic was another to take a hammering after the Footsie’s early dive.

The FTSE 250 company was down 29% at one stage on concerns the weak stock market could threaten its solvency levels.

Insurers have to guarantee they have sufficient funding to cover any potential liability.

Analysts had feared Britannic could breach its solvency level if the Footsie went below the 3300 mark.

The group recovered some of its falls to close down 12% only after stating it was in no danger of doing so.

And its larger rivals, Prudential and Norwich Union-owner Aviva, both made up ground after their recent falls.

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