FTSE dragged into negative territory

A punishing session for the banking and homebuilders sectors helped drag the FTSE 100 Index into negative territory today.

Sky-high oil prices had meant energy and mining stocks outweighed losses elsewhere and kept the London market marginally in the black for much of the day.

But fresh credit crunch gloom from across the Atlantic coupled with more housing sector woes sent Britain’s banks and housebuilders plunging late on and dragged the FTSE 100 Index down 29.2 points to 5877.6 by the close.

The fall came despite a good start on Wall Street which saw around a quarter of Friday’s 400 point losses clawed back.

In London, Britain’s three biggest banks topped the faller’s board after investors were rattled by the first ever quarterly loss for US investment bank Lehman Brothers. The Wall Street giant, whose financial position has been the subject of extensive speculation, also announced a six billion dollar cash call.

The news created fresh fears about the credit crunch and saw Halifax Bank of Scotland fall more than 7%, or 23.75p to 307p. Barclays also suffered from speculation that the group could move to raise cash from investors in the Middle East or Asia, sending shares down more than 5%, or 19.25p to 318.5p.

And the Royal Bank of Scotland was close behind, falling nearly 5% or 11.75p to 233.75p, despite the bank earlier announcing more than 95% backing for its £12 own billion rights issue.

Housebuilders – who have suffered relentless pressure amid the credit crunch - were deep in negative territory after the Financial Times reported that a host of firms could be forced to write down the value of their land holdings.

FTSE 250 company Barratt Developments was the biggest casualty, falling more than 14%, or 20p to 120.75p. It was followed by Redrow, which shed nearly 9%, or 17p to 197.5p, and Bellway, which was off 47.5p to 541.5p. Footsie stock Persimmon was also 18.5p down at 428.75p.

Retailers were also on the back foot thanks to yet another survey revealing consumer confidence at a historic low. Argos owner Home Retail Group lost 6.75p to 231.75p, and Sainsbury’s dipped 10.5p to 333.25p.

On the positive side, BP and Royal Dutch Shell were among the top share risers with crude oil prices above 136 US dollars a barrel – just below the new all-time high of 139.12 seen on Friday.

BP rose 14p to 594.75p, followed by Shell, which gained 32p to 2087p. BG Group cheered 24p to 1280p, while oil and gas services firm Wood was 12p better at 477.25p.

But British Airways was again punished as concerns over its fuel bill mounted. The airline was down more than 3% or 5.75p to 227.75p.

The Footsie’s four biggest risers were Xstrata, up 115p to 4222p, Wood Group up 12p to 477.25p, BP up 14p to 594.75p and Tullow Oil which closed 18.5p ahead at 919p.

The four biggest fallers were HBOS, down 23.75p to 307p, Barclays which fell 19.25p to 318.5p, RBS down 11.75p to 233.75p and ITV which closed down 2.8p at 56.3p.