Northern Rock leads FTSE into positive territory

The London market forged upwards today after further gains for banking stocks offset losses in the mining sector.

The FTSE 100 Index was 52.6 points ahead at 6587.8 by mid-morning – as investors awaited an expected decision to keep interest rates on hold from the Bank of England.

Northern Rock shares led the Footsie risers board, surging nearly 14% as investors weighed up the chances of a rescue bid amid reports that Citigroup was willing to back a possible takeover. The shares were 20.2p up at 172p, coming off record lows earlier this week.

Elsewhere in the sector Royal Bank of Scotland, the likely victor in the battle for ABN Amro which comes to a head this week, was up 18p at 572p. Bid rival Barclays gained 18p to 658p as positive sentiment returned to financial stocks after weeks on the back foot due to the credit crisis.

Inter-dealer broker Icap – a rare beneficiary of the market volatility – was the leading Footsie faller despite expecting first-half profits at the top end of expectations. Profit-taking sent the stock 14p lower to 519p, a fall of nearly 3%.

Profit-taking and weaker metals prices also took its toll on the heavily-weighted mining sector today, with BHP Billiton dipping 23p to 1724p, Antofagasta down 9.5p to 797p and Anglo American off 32p to 3265p.

In the second tier, oil firm Abbot Group advanced almost 21% after confirming bid talks which whetted appetites of a takeover battle for the business. Shares leapt 60.5p to 352.25p on the news.

Elsewhere brewer Marston’s was in positive territory as investors shrugged off the company’s warning that a £2 million repair bill following flooding would leave full-year profits “slightly below” the £100 million expected in the City. Marston’s moved 5.5p higher to 370.25p.