The London market experienced more turbulence today as the FTSE 100 Index dived more than 100 points into the red.
However, a positive opening on Wall Street rescued the Footsie, which eventually closed down 34.2 points at 6109.3 after earlier coming within 41 points of the 6,000 barrier.
The late session improvement came after tame inflation data in the United States, coupled with the lack of any immediate bad news in relation to the credit squeeze, caused stocks on Wall Street to turn positive.
However, the respite may be temporary as analysts are braced for more volatility in the days ahead.
Housebuilders lent their support to the Footsie, buoyed by the prospect that the Bank of England may hold off from raising interest rates after better-than-expected inflation figures yesterday.
Persimmon topped the risers’ board with a 4% improvement, or 45p to 1256p, while Barratt Developments gained 25.5p to 945.5p. In the second tier, Berkeley Group led the risers with a 72p lift to 1614p, Bovis Homes cheered 31.5p to 805p and Taylor Wimpey advanced 5.5p to 342.5p.
Back in the top flight, Foster’s brewer Scottish & Newcastle benefited from a second day of speculation about a potential tie-up with Carlsberg. The company, regularly linked with bid rumours, gained more than 2% in a weak market, ahead 13p at 593p.
Broadcaster ITV cheered 2%, or 2.1p to 106.2p, after it reported a sharp improvement adult viewing figures at its flagship ITV1 channel following a 23% increase in July.
Unilever was also higher, up 26p at 1511p, after sentiment in the consumer products sector was boosted by positive half-year results from Nestle.
Tropical storm forecasts lifted oil prices, meaning Royal Dutch Shell rose 12p to 1847p and BP edged ahead 2p to 542p.
The US sub-prime hangover weighed on financial stocks, as mortgage lender Northern Rock led the retreat with a fall of more than 5%, or 38.5p to 687.5p. The group has been particularly hard hit as it is heavily reliant on wholesale credit markets to fund its mortgage lending business.
Royal Bank of Scotland was off 12.5p at 561p, while Asian-facing bank Standard Chartered slipped 36p to 1562p.
Fund managers also suffered due to their exposure to the US mortgage market, with Schroders off 46p at 1175p and Man Group down 7.25p at 487.25p.
Other fallers included drugs manufacturer GlaxoSmithKline, down 13p at 1249p after US regulators decided the firm’s Avandia diabetes treatment would bear more prominent health warnings about its possible side-effects.
On a quiet day for corporate news, construction group Balfour Beatty saw its shares close unchanged at 430p despite unveiling forecast-beating profits and a record order book worth more than £10 billion.
The biggest Footsie risers were Persimmon up 45p at 1256p, Barratt Developments ahead 25.5p at 945.5p, Scottish & Newcastle up 13p at 593p and Hammerson ahead 26p at 1240p.
The biggest fallers were Northern Rock down 38.5p at 687.5p, Experian Group off 21p at 513.5p, Schroders down 46p at 1175p and InterContinental Hotels Group off 40p at 1049p.