Footsie recovers to finish day in positive territory

The London market made a successful late bid for positive territory today in a rollercoaster session for many heavyweight stocks.

Sharp losses on Asian exchanges and a disappointing update from the Royal Bank of Scotland sent the market 36 points lower at one stage as hopes of a sustained pre-Christmas rally seemed quickly to diminish.

But investors were tempted back into the market by some positive economic data in the United States and the news that poker giant PartyGaming was raking in more profits than the City expected as the FTSE 100 Index finished 2.3 points higher at 5531.1.

In the banking sector, the failure of RBS to follow rivals such as HBOS and Alliance & Leicester by upping its earnings guidance left investors unimpressed.

Despite stating its confidence in meeting hopes and flagging signs that bad debts may be levelling off, RBS declined by as much as 2% before settling 19p lower at 1692p.

The decline was not entirely unexpected as RBS has been on the shopping list of investors in recent days following the upbeat news from HBOS and A&L, which slipped 2p and 1.5p to 923p and 941p respectively today.

Another heavy faller was Standard Chartered – off 21p at 1194p – as investors continued to react negatively to its trading update yesterday.

But significant gains by the likes of PartyGaming and a string of retailers were enough to overcome the impact of stocks on the slide.

PartyGaming shares soared 16% or 19.25p to 136.25p to stand at their highest level since September after it said annual results were likely to beat expectations. The owner of PartyPoker.com said its casino business experienced a “marked uplift” after the introduction of blackjack in October.

It was followed on the risers board by retailer Marks & Spencer, which continued to pull away from the level of 400p a share offered by tycoon Philip Green last year. Amid hopes of a recovery in high street trading conditions, M&S stood at 472.25p, a gain of 16.75p.

It was joined on the way up by supermarket giant Tesco, rising 7.5p to 319p, while rival Sainsburys cheered 5.5p to 293.5p.

Outside the top flight, Virgin Mobile was in focus after rejecting a takeover offer from cable giant NTL. The stock added 9.5p to 355p, amid hopes NTL would raise its 323p-a-share offer, which valued it at £817 million.

Tour operator First Choice lost 3.5p to 218.75p despite posting record annual profits. It said current trading was strong though sales in its specialist holidays business were down 8% this winter, partly because holidaymakers appeared reluctant to visit areas affected by the tsunami.

The biggest Footsie risers were PartyGaming up 19.25p at 136.25p, Marks & Spencer ahead 16.75p at 472.25p, Old Mutual up 4.25p at 160.5p and Tesco ahead 7.5p at 319p.

The biggest fallers were Wolseley down 30p at 1223p, Liberty International off 23p at 966p, Tate & Lyle down 12p at 567.5p and British American Tobacco off 26p at 1270p.