Shares Alliance & Leicester powered 15% higher today after soothing investors with a reassuring trading statement.
The surprise update from the mortgage lender – along with positive noises from Bradford & Bingley – went some way to settling nerves over the duo’s potential exposure to credit crunch losses.
The FTSE 100 Index was 6.4 higher at 6312.6 by mid morning, easing back on earlier progress as the impetus the updates gave to the heavily-weighted banking sector faded away.
A&L said full-year underlying profits were likely to be ahead of market expectations, despite £55 million in investment writedowns, lifting the shares 86.5p to 722p.
Bradford & Bingley was also a source of cheer after it said trading conditions remained healthy and that it had successfully funded the bank during the recent credit crunch.
Shares rose 5% at the start of the session, although the FTSE 250 Index stock later eased to stand 4.25p higher at 307p.
Most blue-chip banking stocks were unable to hang on to their early gains, with Royal Bank of Scotland 9.5p lower at 435p and HBOS 5p weaker at 784p. Barclays suffered the heaviest losses among financials with a near 5% fall of 25p to 530p.
Elsewhere in the top flight, Currys owner DSG International was the Footsie’s leading faller, with shares dropping 4%, or 4.7p to 113.5p following yesterday’s warnings of an uncertain trading outlook.
All Bar One pubs group Mitchells & Butlers meanwhile produced flat profits and braced investors for a difficult winter following smoking bans. With losses from a delayed property deal spiralling still further to £260 million, shares in M&B were off almost 4%, or 23.5p, at 597.5p.
The gloom spread across the sector with Enterprise Inns off 19.5p at 535.5p. JD Wetherspoon was the leading faller in the second tier, off 20.75p at 399.25p, closely followed by Greene King, down 34.5p at 793.5p.