LONDON (ShareCast) - A late rally in reaction to strength on Wall Street narrowed losses in London, with investors cheering a $2 drop in the price of oil, but the leading index still ended with a hefty deficit.

Banks had struggled earlier due to profit fears and ongoing concerns about the raft of rights issues doing the rounds, but a few buyers returned late on.

HBOS announced the timetable for its £4bn cash call and said a trading update will be released in about two weeks time. The shares ended lower, but off their worst levels, as did Barclays.

Alliance and Leicester finished among the best performers after the Daily Telegraph said private equity firm Texas Pacific plans to use its investment in Bradford and Bingley as a launch pad to build stakes in other lenders.

Meanwhile, Royal Bank of Scotland advanced after Morgan Stanley upped its stance to ‘overweight’ from ‘underweight’, saying the bank’s £12bn rights issue has resolved many of its problems.

The blue chip index still closed with heavy losses though as Kazakhstan resources firm ENRC dropped after copper prices declined for the third day in row. Vedanta, Antofagasta and Kazakhmys also fell.

BP and Cairn Energy led oil stocks south as crude prices tumbled below $123 a barrel, but oil services group Amec continued its gains from yesterday when it signed an agreement with BP International to provide engineering and project management services for the oil giant’s offshore developments.

The lower oil price was good news for British Airways, leaving its streaks ahead, although the airline revealed that passenger numbers fell 0.6% in May due to weakness in the shorthaul premium and longhaul non-premium markets.

Housebuilders stayed under the cosh after UBS advised investors to sell a number of companies in the sector. The broker downgraded Persimmon, Bellway and Redrow to ‘sell’ from ‘neutral’. It cut its price target for Persimmon to 400p from 640p, Bellway to 580p from 795p and Redrow to 208p from 285p.

There were also losses at mobile telecoms goliath Vodafone after it began trading without the right to the latest dividend.

DIY retailer Kingfisher lost early gains as it warned trading remains tough, especially in the UK. First quarter profits rose by 8.9% to £96m on sales to 13 May up 8.6% to £2.49bn, but like-for-like fell by 4.1% with the UK down by 7.9%. "As anticipated, trading remained very tough, especially in the UK, and the poor weather was unhelpful for sales of outdoor products," it said.

In broker comment, Investec Securities has downgraded its recommendation on hedge fund manager Man Group to ‘hold’ from ‘buy’ on valuation grounds.

Mail order specialist Findel, the company behind the Kleeneze catalogues, continues to be plagued by bad debt worries and leads the FTSE 250’s fallers.

Chloride Group is also sharply lower after Missouri-based Emerson Electric said it was no longer interested in bidding for the power supply company.

Spreadbet firm IG Group reports strong growth across all of its financial businesses throughout the year and expects an increase in revenue of over 50% to around £184m (2007: £122m) with an EBITDA margin of approximately 53% for the year to May.

Sportingbet's operating profit rose by 143% to £7.3m in its third quarter to April with revenues up 25% to £365m. The online betting group added it is confident of meeting full year expectations. The group said that two Turkish UK-based Sportingbet employees who were visiting Turkey on holiday remain in custody, but it has no further information.

Northumbrian Water lifted full year profits by 15.2% to £170m, though cautioned flooding continues to pose difficulties for the company. The dividend for the year rises by 7.1%.

Ulster-based media group UTV has become the latest company to tap the market for funds by means of a rights issue. The company is looking to raise in the region of £49.9m, through a rights issue on the basis of two new shares for every three shares held at 130p.

Wagon’s plans to raise £49m from a fully underwritten 10 for 1 rights issue at 4p a share and news that sales volumes will be hit this year sent the automotive components firm plunging.

Meanwhile, the rights issue by sub-prime lender Cattles has received strong support from the company’s shareholders with 96.7% of the shares on offer taken up.


FTSE 100 - Risers
British Airways (BAY) 243.75p +5.63%
Smith & Nephew (SN.) 581.50p +3.84%
Smiths Group (SMIN) 1,050.00p +3.45%
Alliance & Leicester (AL.) 412.50p +3.06%
FirstGroup (FGP) 532.50p +2.80%
Amec (AMEC) 907.00p +2.60%
Standard Life (SL.) 268.50p +2.29%
Compass Group (CPG) 393.75p +2.27%
Royal Bank of Scotland Group (RBS) 249.50p +1.94%
Johnson Matthey (JMAT) 2,039.00p +1.80%

FTSE 100 - Fallers
Vodafone Group (VOD) 154.65p -4.98%
London Stock Exchange Group (LSE) 918.50p -4.47%
Vedanta Resources (VED) 2,322.00p -4.21%
BP (BP.) 581.00p -3.89%
National Grid (NG.) 720.00p -3.81%
Kazakhmys (KAZ) 1,670.00p -3.80%
Cairn Energy (CNE) 3,224.00p -3.70%
Eurasian Natural Resources (ENRC) 1,319.00p -3.51%
HBOS (HBOS) 340.50p -3.20%
Standard Chartered (STAN) 1,754.00p -2.93%

FTSE 250 - Risers
easyJet (EZJ) 314.75p +6.60%
Informa (INF) 404.25p +4.52%
Shaftesbury (SHB) 480.25p +4.46%
Stagecoach Group (SGC) 247.75p +4.10%
Babcock International Group (BAB) 647.50p +3.77%
Cookson Group (CKSN) 739.00p +3.50%
TR Property Investment Sigma Shares (TRYS) 79.50p +3.25%
Brixton (BXTN) 269.75p +2.57%
Rentokil Initial (RTO) 100.00p +2.56%
PayPoint (PAY) 622.50p +2.55%

FTSE 250 - Fallers
Findel (FDL) 194.25p -11.20%
Chloride Group (CHLD) 252.75p -10.77%
Barratt Developments (BDEV) 143.75p -8.15%
Bovis Homes Group (BVS) 388.00p -5.60%
Taylor Wimpey (TW.) 78.00p -5.17%
BSS Group (BTSM) 346.25p -4.75%
Soco International (SIA) 1,815.00p -4.47%
Moneysupermarket.com (MONY) 128.00p -4.30%
Redrow (RDW) 214.00p -4.14%
Headlam Group (HEAD) 364.75p -4.01%

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