FTSE in positive territory

Northern Rock shares dived below £1 today after another sharp sell-off for the beleaguered mortgage bank.

The stock stood 22% lower by mid-morning, a drop of 23.4p at 80.8p, although the decline had been as much as 40% as investors continued to bail out after yesterday’s news that rescue proposals were “materially below” the firm’s value at the start of the week.

The wider London market also took a battering on Monday, but hopes of a sizeable recovery were dashed when the FTSE 100 Index gave up the 63 point increase seen in the opening minutes of trading. The market later steadied, with the top flight 35.1 points higher at 6155.9 by mid-morning.

There was another nervy session for the banking sector, with shares initially lower. Royal Bank of Scotland recovered to stand 10.75p higher at 414.75p, while Barclays rose 19.25p to 510.5p and Alliance & Leicester gained 12p to 593.5p.

Investors also sought cheap-looking stocks in the property sector, with Land Securities ahead 46p at 1423p and Liberty International 26p higher at 1036p.

In the FTSE 250 Index, buy-to-let specialist Paragon Group of Companies dived 41% after it said it faced funding uncertainties. The group, whose costs have soared following the summer credit crunch, saw its share price fall 83.25p to 121p.

Bradford & Bingley, another buy-to-let specialist, fared better after it boosted its liquidity position with the £4.2 billion sale of two loan books. Shares surged in early trading, then hit negative territory before recovering to stand 15.5p higher at 272.5p.

Meanwhile, easyJet shares rose 1% after it posted annual profits £201.9 million, an increase of 56% on a year earlier. The airline offered further encouragement by forecasting underlying profits growth of 20% in the current financial year. Shares lifted 4.5p to 584.5p.