Bank shares up in UK

Bank shares were sharply higher in the UK today amid hopes a new wave of credit-related writedowns could signal the sector is over the worst of its recent crisis.

The FTSE 100 Index opened the new quarter 42.3 points higher at 5744.4, with Wall Street markets also expected to follow suit.

Barclays, Alliance & Leicester and Royal Bank of Scotland posted gains of 3% by mid-morning, despite the additional write-downs worth £9.6 billion from Swiss bank UBS.

Analysts were surprised to see the Footsie in positive territory.

Martin Slaney, head of derivatives at GFT Global Markets, said: “This is symptomatic that the bear market is reaching a bottom. Investors seem to be saying that the worst is over.”

Barclays gained 20.25p to 473.25p, Royal Bank of Scotland lifted 13.5p to 350.75p and Alliance & Leicester cheered 20.5p to 539p.

Elsewhere in the top flight, Friends Provident shares continued to rise amid reports that shareholders want the life assurer’s board to hold talks with private equity suitor JC Flowers.

While Friends rejected an approach at 150p a share, analysts have been speculating that the company may be looking for a figure of up to 170p. As a result the stock lifted 7p to 130.6p.

Pharmaceuticals company AstraZeneca enjoyed gains for a second successive session after Monday’s positive research news on cholesterol treatment Crestor. With JP Morgan upping its rating on the stock, Astra rose 91p to 1975p – a gain of 5%.

The major downside for the market came from energy shares after crude oil prices fell and JP Morgan lowered its target price for BP. Shares in the company were off 8.5p at 503.5p, while Royal Dutch Shell slipped 18p to 1678p.

In a depressed session for mining stocks, Lonmin fell 115p to 2956p and Anglo American eased 95p to 2933p.