Financials rally on FTSE

Positive momentum on the London market was being driven by financial stocks today as the sector recovered from yesterday’s decline.

By mid-morning the FTSE 100 Index was 10.7 points ahead at 4297.7, with banks and insurers among the highest climbers.

Yesterday the Footsie had dipped to its lowest level since last October after investors failed to warm to a takeover bid for banking group Abbey National.

Analysts said the upturn was also helped by a late rally on Wall Street, which left the Dow Jones Industrial Average unchanged last night.

In London, insurance giant Prudential was the second-highest top-flight riser after saying that businesses across the group were “firing on all cylinders”.

Better-than-expected half-year figures were offset by a lack of an update on on the sale of the Pru’s 79% stake in internet bank Egg, but the stock still gained 8p to 441p.

The Pru was joined by Norwich Union owner Aviva, up 10p to 534.5p and Royal & Sun Alliance, advancing 1.25p to 76.25p.

Meanwhile, Abbey added 4.25p to 561.25p after disappointment at Banco Santander Central Hispano’s £8.5bn (€12.9bn) offer caused it to lose 23p yesterday.

In contrast, Alliance & Leicester lost 2p to 827p despite growth across its business helping half-year profits edge up 2% to £268m (€405.5m).

British American Tobacco was also in the red – off 22p to 821p – after it reiterated warnings that tough trading in Canada and the effect of the weak US dollar would hit second half profits.

Energy giant BP was also in the red – off 5.25p to 484.5p – despite saying the highest oil prices for more than 20 years had helped it deliver a 20% hike in half-year profits.

Outside the top flight, ailing retailer WH Smith advanced 4.5p to 291p after mapping out its strategy for reinvigorating the business.