FTSE fights back
THE FTSE index rallied this morning opening the day up 84 points after a turbulent 24 hours which saw more than £51bn wiped off the value of the country's top companies.
Markets around the world suffered yesterday in reaction to the rescue and cut-price sale of one of America's largest investment banks – Bear Stearns.
The US central bank is expected to slash interest rates today to help boost confidence in the US economy.
Economists are forecasting that the benchmark US interest rate will be cut by up to 1%.
Markets around the world were hit yesterday as the FTSE 100 Index plunged 3.9% to close at its lowest level for more than two years, down 217.3 points at 5414.4.
An extra £5bn of funding announced by the Bank of England to help ease the credit squeeze was also unable to bolster trading sentiment in London.
The Prime Minister, Gordon Brown, promised to take “whatever action is necessary” to maintain economic stability.
Banking stocks took a hammering as investors digested the news – which marked the biggest casualty so far of the credit crunch.
Britain's biggest mortgage lender HBOS, owner of Halifax and Bank of Scotland, led the sector's declines, down nearly 13%, or 67.5p to 460.5p, not aided by a downgrade from broker Panmure Gordon. Barclays followed, losing 9%, or 40.5p, to close at 392.5p.
Shares in rivals Royal Bank of Scotland and Alliance & Leicester also joined the slide, losing 29p to 304.75p and 36.75p to 475.75p respectively.
More evidence of the US housing market collapse was also shown by heating and plumbing giant Wolseley's interim results, as pre-tax profits fell by nearly three quarters. Shares in the Plumb Center parent were off 49p, to 483p, more than 9%.
The gloom spread to one of Britain's biggest housebuilders Taylor Wimpey, which eased 11p to 151p, and B&Q-owner Kingfisher also lost ground, falling 5.3p to 125p.
