FTSE retreats 30 points

London’s blue-chips struggled to make headway today as banking and mining stocks weighed on the market.

The biggest casualty was Northern Rock, as the banking group fell nearly 9% - or 82p – to 865.5p after warning that profits for the year would be below analyst expectations.

The company disappointed investors with news that underlying profits would grow by around 15% during 2007, lower than the expected 17% increase.

The downbeat update, as well as wider concerns over the US economy and the sub-prime mortgage sector, continued to drag on the FTSE 100 Index, which stood 30.2 points lower at 6529.1 by mid-morning

Banking stocks fell in light of the trading update from Northern Rock, with Alliance & Leicester off by 31p to 1089p and HBOS down 24p at 979p.

Mining stocks also featured high among the fallers on lower copper prices amid fears over falling demand for the metal in Asia. Lonmin was off 162p – or 4% - at 3895p, and Antofagasta down 20p at 589p

Moving in the opposite direction were drugs firm AstraZeneca, which topped the risers’ board on the back of a broker upgrade. The stock was ahead 67p at 2650p.

Supermarket giant Sainsbury’s also made progress as traders revived talk of a potential bid for the firm, lifting the shares 11p to 584p.

Meanwhile defence firm BAE Systems led the Footsie risers as it recouped some of its losses from the previous session following the news of an anti-corruption probe by the US Department of Justice over its dealings in Saudi Arabia. The stock gained nearly 1%, or 3.25p to 411p.

Housebuilders were on the back foot after merger partners Taylor Woodrow and George Wimpey warned of “less buoyant” conditions for the housing sector over the rest of the year. In the second tier, Taylor Woodrow fell almost 3%, or 10.5p to 368.25p, and Wimpey lost 14p to 511.5p.