FTSE up 46 points

Barclays shares surged 64% today after management moved to reassure shareholders in the wake of a nine-day losing streak for the bank.

An open letter from chief executive John Varley and chairman Marcus Agius reminded investors that Barclays was on track to exceed 2008 market forecasts of £5.3bn and said the bank had no need for government assistance.

The subsequent rally by Barclays – up 33.1p at 84.2p – and other banking stocks helped the FTSE 100 Index start the week on the front foot. It was 46.8 points higher at 4099.3 by mid-morning.

Lloyds Banking Group was 24% or 12.1p higher at 61.4p, while Royal Bank of Scotland rose 21% or 2.6p to 14.7p and HSBC lifted 28p to 543.5p.

Insurers also settled after a turbulent few days, with Aviva up 21p at 285p and Prudential 17.5p stronger at 306p.

Building supplies group Wolseley moved in the opposite direction, off 36%, after it warned of a rise in debts because of currency movements and said trading profits for the five months to December 31 were down by two-thirds.

With investors fearful that Wolseley could breach banking covenants, shares fell 103.9p to 182.1p.

Wickes owner Travis Perkins felt a chill from the update after it dropped 43.75p to 266p in the FTSE 250 Index, while building supplies firm BSS fell 22.5p to 233.5p and insulation specialist SIG tumbled 10.5p to 118p.

Shares in sub-prime lender Cattles led the FTSE 250 fallers – down 29% or 5.25p to 12.75p – after it said it had withdrawn its application to take retail deposits. It blamed current market conditions and uncertainty caused by the ongoing reorganisation of its banking facilities.

Meanwhile, fund manager Henderson’s confirmation that it was in talks about a possible offer for New Star Asset Management helped lift shares by 7.75p to 58.25p.