A shares rebound from embattled mortgage specialist Alliance & Leicester helped the London market bank a second day of gains today.
The group saw shares surge 8% after calming City nerves about its exposure to the fall-out from the credit crunch.
The news added to renewed hopes of interest rate cuts after further signs of a slowing housing market, steadying the FTSE 100 Index to close up 42.9 points at 6349.1.
The Footsie had dipped into negative territory earlier in the session, with blue chips such as Mitchells & Butlers dragging on the index.
But A&L was the top share riser after its surprise update, ahead 50.5p at 686p.
While it revealed £55 million in investment write-downs and warned of a slower 2008, the news was far from the worst case scenario for investors.
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 squeeze.
Shares rose 5% at the start of the session, although the FTSE 250 Index stock later eased to stand 0.25p higher at 303p.
Most blue-chip banking stocks were unable to hang on to their early gains, with Royal Bank of Scotland 1.25p lower at 443.25p and HBOS 4p weaker at 785p. Barclays suffered the heaviest losses among financials with a near 3% fall of 14p to 540p.
However, heavily weighted miners were on the front foot amid speculation about a possible offer for Vedanta Resources – up 158p to 2192p. Antofagasta followed with a gain of 52p to 755p, while Xstrata was ahead 152p at 3313p.
Elsewhere in the top flight, Currys owner DSG International was one of the Footsie’s leading fallers, with shares dropping 4%, or 4.7p to 113.5p following yesterday’s warnings of an uncertain trading outlook.
Sentiment towards retailers was further impacted by a cautious pre-Christmas survey from business lobby group CBI, while B&Q owner Kingfisher posted a lacklustre third quarter update, leaving its shares down 2.3p to 157.7p.
Marks & Spencer followed suit with a drop of 14.5p to 594.5p and Argos owner Home Retail Group dipped 5.25p to 350.25p.
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 6%, or 35.5p, at 585.5p.
The gloom spread across the sector with Enterprise Inns off 13p at 542p. JD Wetherspoon was a leading faller in the second tier, off 19.5p at 400.5p, closely followed by Greene King, down 21.5p at 806.5p.
The biggest Footsie risers were Alliance & Leicester up 50.5p at 686p, Vedanta Resources ahead 158p at 2192p, Antofagasta up 52p at 755p and Anglo American up 199p at 3154p.
The biggest Footsie fallers were Mitchells & Butlers down 35.5p at 585.5p, DSG International off 4.7p at 113.5p, Punch Taverns down 32p at 829.5p and Northern Rock down 4p at 116.7p.