FTSE rebounds

The London market was in a bullish mood today after a continued rebound for mortgage lender Northern Rock lifted financial stocks.

The Newcastle-based bank was more than 18% ahead after the Treasury granted an extension to its deposit guarantee to include new accounts in a move to give it more breathing space as it continues to explore its strategic options.

The FTSE 100 Index crept closer to the 6,600 mark – up 50.7 points at 6591.6 - with investors eyeing Alistair Darling’s pre-budget report due later in the day.

Northern Rock was 32.25p higher at 204.75p as it also benefited from reports that US-based Lone Star was considering a move for the group. The uplift in sentiment buoyed share across the sector, with Alliance & Leicester climbing 18p to 791p and Asian-facing bank Standard Chartered gaining 35p to 1675p.

Oil giant BP was on the front foot after a series of broker upgrades. Despite a poor operational performance in the current year, most brokers are predicting a recovery in 2008 sending shares up 9p to 578.5p.

Sector peer Royal Dutch Shell was more than 1% higher, or 27p to 1966p, while BG Group rose 18p to 844.5p and Tullow Oil jumped 15p to 601p.

Shares in building and plumbing materials firm Wolseley shed almost 4%, or 32p, to 841.5p on rumours that Citi had begun offloading some of its holding.

Housebuilders Barratt Developments and Persimmon were among the reduced list of top tier fallers following negative comments on the outlook for the UK housing market from UBS. The firms fell 10p and 21p to 745.5p and 1019p respectively.

In the second tier, a positive trading update from Greggs boosted the bakery chain up 146p to 4796p, while news of a potential offer for floor coverings specialist Carpetright helped the stock lift 5%, or 57p to 1218p.