Oil worries keep FTSE down

Financial stocks were in demand as the London market set about breaking a run of four consecutive weekly losses.

Northern Rock was the top riser ahead of its interim results tomorrow as the FTSE 100 Index moved 2.1 points higher to 4341.3 by mid-morning.

But concerns over the high price of oil and the weak US dollar continued to limit the progress of blue-chip shares.

News that Typhoo Tea owner Premier Foods had cut its flotation price and speculation that Virgin Mobile may pull its plans for a listing further undermined confidence in the stock market.

Northern Rock cheered 9p to 696p as investors looked forward to a rise in half-year profits.

Other financial stocks made ground on the back of the improved sentiment, with HBOS ahead by 8p at 680.5p and Royal Bank of Scotland up 13p at 1539p.

But pressure on exporters and those firms that report the bulk of their earnings in US dollars grew after the greenback anchored close to the 1.87 rate against the pound.

Medical devices maker Smith & Nephew was among those to suffer, heading the list of Footsie fallers with a drop of 11p to 557p.

Blue-chip insurer Prudential advanced 0.75p to 438.5p as investors betted on the conclusion to the long-running sale of its 79% stake in online credit card business, Egg. Shares in Egg cheered 5% or 7.25p to 158.75p.

Elsewhere, clothing retailer Austin Reed weakened 6p to 1267.5p after like-for-like sales fell 5% in the 23 weeks to July 10 due to the under-performance of the Country Casuals womenswear range.

Fashion brand Burberry was also faring poorly, despite unveiling a 14% rise in sales over the first three months of its financial year. Shares slipped 3.5p to 395.25p.