FTSE remains positive after Northern Rock crisis

Northern Rock’s share price was on the back foot today as bid rumours surrounding the crisis-hit mortgage lender swept the market.

The group was down 8%, or 27p, to 279p as traders swapped talk of a 200p a share bid from Lloyds TSB and a 100p a share proposal from Halifax Bank of Scotland.

The speculation ended the bank’s mini-recovery yesterday and defied a wider 2% surge from the FTSE 100 Index, 124.7 points ahead at 6408 by mid-morning as markets responded to a 0.5% interest rate cut from the US Federal Reserve last night.

The Fed’s move helped Wall Street’s Dow Jones Industrial Average to its biggest one day gain in five years – finishing 336 points higher – and buoyant investors caught the mood in London.

Mining stocks led the Footsie, with BHP Billiton the top performer – up 100p to 1630p as analysts said the sector would gain a boost from the Fed’s spur to the economy.

Xstrata progressed 177p to 3034p, while Anglo American was 171p higher at 3061p.

Northern Rock aside, financial stocks under pressure in recent days also continued their recovery with fellow mortgage lender Alliance & Leicester up nearly 5%, or 37p at 830p.

Lloyds TSB and HBOS, the two firms linked with a potential bid for Northern, rose 19.5p to 539p and 31.5p to 870p respectively. Barclays was 24.5p higher at 631p, while Royal Bank of Scotland gained 7.5p to 533.5p.

Insurer Standard Life gained 17.5p to 292.5p as reports suggested it was rekindling its interest in bidding for closed life specialist Resolution.

In the second tier, retailer Woolworths was up more than 6%, or 1.25p, at 21.25p after interim results showed an improvement at its beleaguered retail division.

Recently-floated online price comparison business Moneysupermarket.com also saw shares rise on strong interim figures. The stock was ahead 1.25p at 157p.