FTSE banks in better shape

Halifax Bank of Scotland enjoyed a rare day in the sun today as it was buoyed by renewed confidence over its takeover by Lloyds TSB.

The stock jumped 21%, making it the leading FTSE 100 Index riser, as British Prime Minister Gordon Brown and one major investor signalled support for the deal.

Other banks were also in better shape amid expectations of US Senate agreement for the stalled $700bn (€487bn) banking rescue later tonight, helping the Footsie close up 57.1 points at 4959.6.

London market gains would have been even more impressive but for sliding mining stocks after Xstrata pulled out of a £5bn (€6.3bn) bid for Lonmin. Opening losses on Wall Street ahead of tonight’s Senate vote also proved a drag during the afternoon.

HBOS was the main Footsie stock in focus, and it rose 25.7p to 148.1p, more than recouping a 14% fall yesterday amid concerns the rescue deal might have to be repriced.

Lloyds TSB followed close behind, adding 23.5p to 250p, while elsewhere in the sector Barclays picked up 14.5p to 341p or 4%. Gains for Royal Bank of Scotland were limited to 1p to 180p.

Mining stocks fell on to the back foot after Xstrata’s decision to axe its Lonmin bid due to turmoil in global credit markets. Xstrata lost 33p to 1683p, while Lonmin plunged more than 20% or 461p to 1813p – making it the leading Footsie faller.

Elsewhere Vedanta Resources slipped 118p to 1035p after being downgraded by Goldman Sachs. BHP Billiton was also 50p lower at 1209p.

Supermarket giant Tesco enjoyed another gaining session after it posted first-half profits of £1.43 billion yesterday. The firm added 6.9p to 394.5p after Brewin Dolphin analysts also emphasised the defensive nature of the food retail sector.

Retailers were helped by mounting hopes of an earlier than expected rate cut due to the current economic gloom.

Morrisons added 6p to 264.5p, although Sainsbury’s was 8.5p down to 339.5p. And ahead of an eagerly awaited trading update tomorrow, Marks & Spencer rose 8.75p to 210.25p. The retail cheer saw fashion chain Next on firmer ground, adding 40p to 1059p.

Outside the top flight, Domino’s Pizza dipped 5.5p to 191.75p, despite a rise in third quarter sales.

Online fashion retailer ASOS was another faller despite stellar sales figures as analysts said worsening economic conditions could eventually rein in its rapid growth. Shares were off 22p to 328.75p, or 6%.

The interest rate cut hopes meanwhile pushed several housebuilders higher in the FTSE 250 Index.

Barratt Developments cheered 4.75p to 109.5p, Taylor Wimpey added 1p to 36.25p, while Bovis Homes added 8.5p to 385.5p.

The Footsie’s four biggest risers were HBOS, up 25.7p to 148.1p, Lloyds TSB up 23.5p to 250p, Standard Life up 17p to 257p, and Eurasian Natural Resources which closed up 23p to 528p.

The four biggest fallers were Lonmin, down 461p to 1813p, Vedanta Resources down 118p to 1035p, Autonomy Corporation down 78p to 945p and Johnson Matthey down 69p to 1281p.