FTSE recovers in late trading

London’s leading shares staged a rally in afternoon trading today, buoyed by a strong opening in the US.

The FTSE 100 Index clawed back some of its losses from earlier in the session to close 15.8 points lower at 6615.1.

Despite the firm opening on Wall Street, following a report of stronger-than-expected fuel stocks, concerns regarding the US sub-prime mortgage market and America’s wider economy continued to dampen sentiment in the housing and banking sectors.

Property group Hammerson was down 23p at 1367p while stablemate Liberty International fell 4p to 1134p.

Mortgage groups Alliance & Leicester and HBOS were under pressure as investors feared the US sub-prime crisis would spread to these shores.

A&L was off 12p at 1077p while HBOS fell 7.5p to 987p.

Banking giant HSBC, which has been one of the highest profile firms to suffer from the US sub-prime lending default crisis, saw its shares slip 5.5p to 905p. Meanwhile Royal Bank of Scotland drifted 8.5p to 623.5p.

A downgrade from Goldman Sachs put oil major Royal Dutch Shell among the top share fallers, off 29p at 2107p, as oil prices also slipped back from recent highs. BP was down more than 1%, or 6.5p to 605p.

Strong advances by Whitbread and BSkyB gave some support to blue chip stocks.

Costa Coffee parent Whitbread surged 7%, or 128p, to 1946p as reports revived takeover rumours, suggesting real estate company Starwood Capital may be a possible suitor.

BSkyB followed Whitbread in the risers ranking after the company reported that it had managed to improve its customer retention rates and added 90,000 net customers in its fourth quarter. The stock was ahead 28p at 700p.

Meanwhile Dove-to-Lipton Tea maker Unilever continued gains made in the previous session, fuelled by hopes of consolidation in the sector, with shares up 36p to 1683p.

Mining stocks also added their weight to the benchmark index as a further weakening of the US dollar helped boost metal prices. Kazakhmys climbed 30p to 1370p and Antofagasta lifted 7.5p to 672.5p.

Rio Tinto led the pack on reports that Canadian aluminium producer Alcan had initiated merger talks with the firm in an attempt to fend off unwanted takeover attention from US rival Alcoa. The stock rose 88p to 3993p.

Supermarket Morrisons benefited from a broker upgrade, up 8.5p at 313.75p, with Tesco ahead 8.75p at 422.75p and Sainsbury rising 7.5p to 585p.

In the FTSE 250, Imperial Leather soap maker PZ Cussons fell 2%, or 3p to 162p, as investors fretted over reports that it may be feeling the heat from the weak dollar.

Also in the second tier, self-storage firm Big Yellow Group eased 1p to 531p despite announcing a 16% year-on-year rise in revenue for the three months to June 30.

The biggest Footsie risers were Whitbread up 128p at 1946p, BSkyB ahead 28p at 700p, Morrisons up 8.5p at 313.75p and BG Group up 21p at 842p.

The biggest Footsie fallers were Home Retail Group off 10.75p at 438.75p, Shire down 24p at 1197p, Schroders off 21p at 1134p and British Airways down 7.25p at 418.5p.