Share price recovery flounders

Hopes of a sustained rally on the FTSE 100 Index floundered today after trading on the London market reverted back to its uncertain trend.

The blue-chip index was down 12.5 points at 3676.9 as yesterday’s brighter session – which added £29bn (€44.12bn) to share values – proved a one-off.

Insurers powered the previous day’s rally after the Financial Services Authority relaxed solvency rules, but there was little cheer in the sector today.

But Norwich Union owner Aviva and Legal & General were both unable to find positive territory today while Friends Provident fell more than 2%.

Analysts said the Footsie’s fall, which had been as much as 37 points in early trading, came as investors took profits from yesterday’s rally following a lacklustre session on Wall Street last night.

Martin Dobson of NatWest Stockbrokers said the same problems which had sent the Footsie below the 3,500 mark during January remained.

He added: “The London market still has potential to slide. The underlying economic, political and corporate problems have not been resolved.”

Market watchers now believe the next milestone for the Footsie will come tomorrow when US Secretary of State Colin Powell is expected to present evidence that Iraq is still concealing banned weapons programmes.

In today’s trading, mortgage bank Abbey National was one of the brightest stocks, gaining 2% after selling its consumer credit business First National for £848m (€1.29bn) to the US-based General Electric Company conglomerate.