Slow start to the week for FTSE

The London market today made a lacklustre beginning to the week despite renewed hopes of a rescue bid for crisis-hit mortgage lender Northern Rock.

Speculation that Citigroup was considering offering the bank a £10bn loan and rumours of fresh private equity interest in the company sent Northern Rock’s shares up 14p to 172.5p – a gain of nearly 9%

But with economic and corporate data in short supply the wider FTSE 100 Index drifted 54.9 points lower to 6540.9 at the close, as the previous session’s attempt on the 6,600 mark proved short-lived.

Northern Rock’s advances contrasted with others in the banking sector as Royal Bank of Scotland fell 9p to 560.5p as the company confirmed it had received backing from 86% of ABN Amro shareholders in its bid for the Dutch bank.

RBS suffered on concerns from Bear Stearns that the ABN deal would weaken its balance sheet, reduce its returns on equity and potentially could prove difficult to integrate given the difficult conditions in financial markets.

Bid rival Barclays, which pulled out of the race for ABN on Friday, rose 2p to 662p, while Asian-facing bank Standard Chartered gained 23p to 1640p following positive broker comments. Halifax Bank of Scotland was up 8.5p to 956.5p after paying out dividends, including more than £128 million for private shareholders.

Other risers included brewer SABMiller, as another broker upgrade saw its shares climb 15p to 1466p, on the strength of its Latin American business. Foster’s brewer Scottish & Newcastle was 2% higher, up 12.5p at 622p.

Inter-dealer broker Icap made late progress up the leaders’ board with a 9p gain to 530p, after the London Stock Exchange reported soaring electronic trades in September amid continued financial volatility. The LSE lifted 37p to 1711p in the FTSE 250.

But back in the top flight, mining group Kazakhmys topped the fallers – down nearly 6% after it warned that copper production was likely to fall after a flood at one of its mines. The stock was off 94p at 1502p.

The news dampened sentiment across the heavily weighted sector with Vedanta Resources down 94p at 2086p and Xstrata off 108p at 3212p as traders also took profits after recent highs.

Property firm British Land continued its losing run after delaying the sale of a stake in its Meadowhall shopping centre in Sheffield last week. Shares fell nearly 3%, or 32p, to 1092p.

Carphone Warehouse was also on the back foot amid reports that take-up of its “free” broadband offer had slowed. The company is due to issue an update on Wednesday, but in the meantime shares were 5.75p lower at 344.25p.

The biggest Footsie risers were Northern Rock up 14p at 172.5p, Scottish & Newcastle ahead 12.5p at 622p, Icap up 9p at 530p and InterContinental Hotels ahead 18p at 1073p.

The biggest Footsie fallers were Kazakhmys off 94p at 1502p, Vedanta Resources down 94p at 2086p, Xstrata off 108p at 3212p and British Land down 32p at 1092p.