Beleaguered mortgage lender Northern Rock’s shares soared nearly 30% on the FTSE today after a Virgin-led team was unveiled as the preferred choice to rescue the firm.
The stock tumbled nearly 18% early on, but later advanced 24.1p to 110p as shareholders welcomed the chance to stay on board to benefit from any recovery despite the likelihood of a cut-price offer.
The wider FTSE 100 Index continued its steady start to stand 30.4 points ahead at 6292.4 by the mid-morning.
Sentiment was helped by the extended Thanksgiving weekend in the US, which meant little trading was done on Wall Street on Friday.
Apart from Northern Rock – the Footsie’s leading riser – mining stocks made the early running to lift the benchmark index.
Rio Tinto touted its growth prospects today and revealed plans for a dividend hike as it seeks to ward off interest from BHP Billiton. Rio was 160p higher at 5475p, while BHP was 32p ahead at 1501p.
Elsewhere in the sector – which has also benefited from a combination of higher metals prices and broker upgrades – Xstrata gained 134p to 3152p and Antofagasta cheered 29.5p to 714p.
Banking shares in London were in positive territory, although they lost some of their early impetus.
Barclays was ahead 2p at 512.5p and Royal Bank of Scotland 0.75p stronger at 421.75p. Alliance & Leicester meanwhile was on the back foot - down 17p at 628.5p – after weekend reports of possible sub-prime mortgage writedowns.
The biggest fall of the session came from pubs chain Mitchells & Butlers after Punch Taverns dismissed speculation of talks over a possible bid for the All Bar One owner. Shares in M&B were off 21p at 620p.
In the second tier waste management company Biffa was off 33.5p at 291.5p – a fall of 10% – after it confirmed it had rejected a private equity led takeover approach.