HBOS news dominates FTSE

Financial stocks dominated the London market today after HBOS ended weeks of speculation by ruling out a takeover bid for Abbey National.

Investors reacted with relief that HBOS would not now become embroiled in a drawn-out bidding battle with Spanish bank Santander by making it the highest riser on the FTSE 100 Index, up more than 4% or 30p to 744.5p.

It capped a positive morning for most blue-chip stocks with the Footsie up 22.6 points to stand at 4568.2.

In contrast to the gains made by HBOS, shares in Abbey fell 5% or 31.25p to 578.75p as investors accepted that Santander was now the likely winner.

Elsewhere, Vodafone regained some of the ground lost yesterday in the wake of a negative broker note on the mobile phone sector.

Its shares cheered a penny to 130.25p, although there was no such recovery at rival mmO2 which weakened a further 0.25p to 94.25p.

InterContinental Hotels was a strong riser after it announced that chief executive Richard North will leave the group at the end of this month.

Shares improved 13.5p to 635p, reflecting the view among analysts that Mr North’s strengths were less to do with taking the group forward than overseeing its corporate restructuring, which he carried out successfully.

Outside the top flight, strong results from Garfunkel’s and Frankie & Benny’s helped shares in the Restaurant Group lift almost 5% or 4.5p to 99p.

Half-year profits rose 40% and like-for-like sales gained 3.7% but the company also said the improvement had gathered pace since then to show a 5% sales rise.

Investors also took another look at French Connection after its shares slumped 12% yesterday following the news that its UK retail sales had declined sharply. The clothing retailer bounced back with 10.75p rise to 340p today.