FTSE ends three day losing streak

Investors returned to banking stocks today as the London market ended a three-day losing streak.

Investors returned to banking stocks today as the London market ended a three-day losing streak.

The market put fears of the potential fall-out from the credit crunch to one side as heavyweights such as Royal Bank of Scotland and Barclays made strong gains.

The FTSE 100 Index closed 33 points ahead at 6337.9 – its first positive session since last Tuesday – helped by early progress on Wall Street.

The gains overcame a brief 36 point plunge into the red after initial fears of a terrorist attack following a blaze on the 2012 Olympic Games site in East London.

But the day belonged to the financial sector after stocks battered by fears of losses last week made a strong recovery.

Royal Bank of Scotland was the Footsie’s leading gainer – rising more than 9%, or 37p to 439.75p. The stock was closely followed by Barclays, which gained 8%, or 38.5p, to 513p. Other risers included Halifax Bank of Scotland, up 44p to 796.5p, and Lloyds TSB, cheering 13p to 487.5p.

News of another suitor for stricken bank Northern Rock also helped the mortgage lender rise more than 6%, or 9.4p, to 154.4p after former Abbey boss and City luminary Luqman Arnold revealed he was preparing a rescue plan for the group.

Among insurers, Standard Life made firm progress as investors welcomed the group’s decision to walk away from a potentially expensive bid battle for closed fund specialist Resolution. The stock soared 15.75p to 259.5p after it yesterday ruled out upping or restructuring its bid.

So-called zombie fund group Resolution, however, fell more than 2%, or 17p, to 706p, with rival Pearl now looking set to pick up the group without a further fight.

Mining giant Rio Tinto continued last week’s gains, up 34p to 5658p, after suitor BHP Billiton revealed further details of its proposed offer, with plans for a £14 billion share buyback if successful. BHP, however slipped 21p to 1607p.

Broadcaster ITV was also under pressure, off 2.9p at 86.2p, after a downgrade from Morgan Stanley.

In the FTSE 250, mortgage group Bradford & Bingley was enjoying the rebound in the financial sector, up 19.25p at 282.25p.

But fashion group French Connection dived 5%, or 7.75p, to 132.75p after it cautioned that profits could fall short of last year if UK trading conditions do not improve soon.

Hovis bread maker Premier Foods bloomed 3%, or 7p to 210p, as it said it was on course to hit annual profit targets – despite a slump in bakery sales.

Robert Wiseman Dairies rose 2p to 463.75p after delivering solid half year figures as it passed on higher costs to consumers and tackled rising commodity prices.

The biggest Footsie risers were Royal Bank of Scotland up 37p at 439.75p, Barclays ahead 38.5p at 513p, Northern Rock up 9.4p at 154.4p and Standard Life ahead 15.75p at 259.5p.

The biggest fallers were Antofagasta down 45p at 700p, Kazakhmys off 75p at 1316p, Vedanta Resources down 108p at 1936p and Xstrata off 165p at 3316p.

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