Some gains for FTSE

Northern Rock led gains on the London market today as shares in the stricken bank surged 7% on renewed hopes of a rescue from investment group Olivant.

The bank gained 5.9p to 91.9p as it emerged that Olivant had been given access to the firm's banks and management, putting it on an equal footing with the rival Virgin consortium.

Northern Rock's gains came as the wider FTSE 100 Index gained 32.8 points to close at 6397.

The rise came as welcome respite from heavy losses seen in the previous session, when the Footsie sank 3% amid doubts over efforts by central banks to tackle the credit crunch.

A positive finish in US markets helped put London on the front foot. But the Dow Jones Industrial Average sunk once more into the red today in early trade as higher-than-expected inflation data led to fears that further rate cuts may not now be on the cards.

In London, pest control-to-cleaning company Rentokil Initial joined Northern Rock on the risers board as investors returned to the stock after yesterday's profits warning sent shares tumbling 22%. Shares lifted 3.9p to 118.2p.

Drinks can maker Rexam made a similar recovery after a profits warning of its own yesterday, adding more than 3% or 15p to 424p.

Defensive stocks were also in demand amid the recent financial turmoil, with National Grid up 21.5p at 842p and Imperial Tobacco 59p higher at 2577p.

Pharmaceutical giant Shire meanwhile soared 39p to 1126p, or 4%, after announcing a deal to boost its gastrointestinal treatment portfolio.

Among the fallers, Halifax Bank of Scotland was still out of favour after its Thursday update signalled weaker retail profits, despite expectations of in-line results. Shares were off 8.5p at 756p, while Royal Bank of Scotland added 5.25p to 439p.

British Gas owner Centrica meanwhile was up 6.75p at 371p, despite flagging up "more challenging" market conditions in a trading update. The group said it still expects business in the second half to be profitable even with wholesale gas price rises putting margins under pressure.

The update was encouraging for nuclear power generator British Energy, which lifted 12p to 541p.

In the FTSE 250 Index, Northern Foods, the maker of Goodfella's frozen pizzas, rose 9%, or 7.5p to 91p after the group said it had seen steady progress across the business and plans to buy back 5% of its shares.

But the biggest gains in the FTSE 250 came from 129-year-old British investment bank Close Brothers after it said that following an indicative offer of more than £1.1bn (€1.53bn) from Andy Stewart, the chief executive of rival Cenkos, it had received further approaches.

Shares rose 10%, or 85p, to 950.5p.

The biggest Footsie risers were Northern Rock up 5.9p at 91.9p, Rexam, up 15p at 424p, Shire ahead 39p at 1126p and Rentokil Initial up 3.9p at 118.2p.

The biggest Footsie fallers were Antofagasta down 31.5p at 702.5p, Anglo American off 108p at 3072p, Hammerson down 30p at 968p and Whitbread off 41p at 1355p.