A volatile session for the FTSE 100 Index saw blue chips claw back the worst of their losses today as a bright start on Wall Street cheered investors.
The Dow Jones Industrial Average fell 2% on Monday amid concerns over financial stocks, but signs the worst may be over for the ailing US housing market and better than expected consumer confidence data helped shares make early ground across the Atlantic.
The Footsie – more than 130 points lower at one point – finished the day 34.9 points lower at 5470.7.
Lower metal prices meant a poor session for heavyweight miners and petrochemical stocks, while the fortunes of petrochemical firms fluctuated in line with oil prices.
In London, heavyweight miner Rio Tinto posted a 55% rise in half-year earnings but shares fell 29p to 5150p amid weakness in the mining sector.
Ferrexpo, the Footsie’s leading faller, slipped almost 9% or 23.5p to 244.5p, while Kazakhmys shed 47p to 1321p as the duo – both with major Russian interests - fell on political tensions in the region.
Oil-facing firms were initially on weaker ground thanks to crude prices below 113 US dollars but concerns over the potential impact of Hurricane Gustav in the Gulf of Mexico pushed the price back up to nearly 117 dollars a barrel by the close.
This helped the likes of BG Group, which slipped 27p to 1164p, make up some ground lost earlier.
Housebuilders took an early blow in the FTSE 250 after Bovis Homes revealed first half profits slumped more than 80%. The firm also warned it did not expect an improvement in the foreseeable future and slashed its interim dividend.
But members of the sector recovered amid reports that under-pressure Taylor Wimpey has secured some breathing space from its banks. Shares in the firm, which reports interims tomorrow, rose more than 14%, or 6.5p to 52p.
Figures from the British Bankers’ Association showing that mortgage lending did not fall any further during July also helped builders who have felt the full force of the credit crunch. Bovis Homes added 13.25p to 441.25p.
Back in the top flight, Lloyds TSB was the chief casualty in the financial sector, down 7.5p at 292p. Royal Bank of Scotland was also off 3p to 217.75p as fears over the health of US financial stocks lingered after another bank failure on Friday.
The best Footsie performer however was property group Liberty International, which gained 5%, or 50.5p to 995.5p, after shopping centre owner Westfield revealed a near-3% stake in the company.
It was closely followed by advertising and media giant WPP, which continued its advances after Friday’s interim results with a gain of 15p to 506.6p.
The leading Footsie risers were Liberty International up 50.5p to 995.5p, WPP ahead 15p at 506.5p, First Group up 12.5p at 593.5p and Next ahead 21p to 1043p.
The four worst performers were Ferrexpo down 23.5p to 244.5p, Enterprise Inns off 19.25p at 321.5p, Rexam down 14.5p to 386p and Johnson Matthey off 55p at 1530p.