Nerves on FTSE, but market holds

A nervous London market was stable today as it looked to avoid a second day of carnage.

Analysts had forecast three-digit falls for the FTSE 100 Index after last night’s shock rejection of the $700bn (€487bn) bank bail-out.

But with signs of a healthy opening on Wall Street and traders perhaps taking a breather, London’s blue chip index was 3.6 points up 4822.4 by mid-morning - reversing heavier losses seen earlier in the session.

The rise came despite another difficult session for banks, with Halifax Bank of Scotland off 10% or 13.5p to 128.5p and Royal Bank of Scotland 8.7p lower at 172.3p, a drop of 5% after it told investors that the acquisition of ABN Amro assets would not be affected by the forced sale of a stake by bid partner Fortis.

HBOS’ merger partner Lloyds TSB managed to reverse some early losses, adding 6p to 223p.

The major corporate news came from Tesco, which rose 4% or 13.6p to 383.5p after it reported a 10% rise in half-year profits and said it was making inroads in the battle against discount rivals.

Other retailers were also enjoying a good session, with Marks & Spencer up 6.25p to 214.5p, and Morrisons up 7.75p to 255p. B&Q owner Kingfisher also added 5.5p to 133.8p.

Shares in broadcaster ITV also edged up 1p to 42p after announcing more than 400 job cuts as part of a cost-cutting exercise.

Pubs chain Enterprise Inns rose 21p to 178.5p – up 13% – after it described trading as robust and said it remained on track to meet profit expectations.

On the downside, oil firms were among the losers as oil remained pegged below $100 a barrel. BP was off 8.25p to 458.5p, and Royal Dutch Shell 19p lower at 1555p. Fuel-hungry British Airways, however, added 5.9p to 175.3p.