London shares bounce back

London shares bounced back from yesterday’s slump with gains across a range of sectors today.

The FTSE 100 Index was up 128.6 points at 3415.6 by lunchtime as traders were lured back into buying mode by some cheap looking stocks.

But analysts remained cautious about the length of the rally and said it was clear that little had changed in the overall state of the market as political and economic concerns were still at the forefront of City minds.

A resilient performance from Wall Street last night boosted morale in London and hopes were growing of a further lift when trading resumes this afternoon.

Only five stocks were in negative territory, but these included Canary Wharf as it followed yesterday’s 22% slump with a 7% fall – down 11.75p at 168.25p.

The latest decline came as investors continued to fret over occupancy rates within the developer’s London office portfolio.

Engineering group Invensys, which is due to fall out of the Footsie on March 21, slipped another 0.25p to 9.5p – a near 3% drop.

But insurers propped up the market with Prudential up 19.75p at 300.75p, Royal & Sun Alliance 3.25p higher at 59.5p, and Aviva 21.25p stronger at 356.25.

Among the banks Abbey National cheered 11p to 328p, Royal Bank of Scotland rose 76p to 1313p, and HBOS lifted 28.5p to 591.5p.

All sectors benefited from the turnaround with oil companies BP and Shell up 10p and 6.5p at 381p and 339.75p respectively. Telecoms giant Vodafone rose 6p to 107p while rival mmO2 gained 2.5p to 44.75p.

Outside the Footsie, steel maker Corus dived 33% after a Dutch court refused to stop the company’s supervisory board from blocking the proposed sale of its aluminium businesses.

Corus, whose shares fell 2.03p to 4.07p, will now have to look for alternative financing after the £500m (€740m) sale to Pechiney fell through.

Meanwhile, retailer Laura Ashley suffered more pain after warning for the second time in as many months that it would miss results hopes.

The latest gloomy update, which comes after poor January trading, is likely to leave underlying losses for last year at £5m (€7.4m). Shares fell 16%, or 1.25p, to 6.5p.

And plant hire group Ashtead tumbled 65% – down 5p at 2.75p – as it said it would default on interest payments while it investigated a possible accounting blunder at its US business Sunbelt.