LONDON (ShareCast) - The leading index, trading three figure losses at lunchtime, more than halved the deficit by the close as Wall Street recovered from a weak start and a sharp drop in oil prices boosted oil hungry firms.

British Airways and cruises outfit Carnival both rallied as crude prices tumbled more than $4 a barrel to $127 as worries that Tropical Storm Dolly will halt production in the Gulf of Mexico eased.

Oil firms also featured among the risers, having enjoyed big gains for much of the session. Cairn and Petrofac were among the best performers, but BG did reverse late on. Miner Lonmin jumped on talk that Xstrata is mulling a bid.

It was also a good day at the office for water group Severn Trent which said trading has been in line with expectations, although its customer debt and cash collection performance remains a risk to its outlook for the year.

But Vodafone was the drag on London. It said revenue expectations this year are now at the bottom of its indicated £39.8bn to £40.7bn range, reflecting first quarter performance, recent economic weakness and lower than expected equipment revenue. Traders also found time to hammer mobile phone retailer Carphone Warehouse.

Investors called time on pub owner Enterprise Inns. It warned that continuing declines in on-trade beer volumes, together with increased levels of assistance to licensees, who are having to cope with difficult trading conditions, has put pressure on group earnings. Punch Taverns and Mitchells & Butlers staggered lower in sympathy.

Plumbers merchant Wolseley is sharply lower after UK managing director Nigel Sibley and HR director Bob Mason cleared out their desks. The firm said: “Given the continuing deterioration in several of its markets, including the UK, the Wolseley group is taking action to reduce duplication and make cost savings across its operations.”

The apathetic response from the market to the fund raising attempts by leading lights of the banking sector weighs heavy on banking stocks, with Royal Bank of Scotland, Barclays and Lloyds TSB down again.

Ukraine-based miner Ferrexpo said production in the second quarter of 2008 was on target, with increased output of pellets and proportion of higher grade pellets. Elsewhere in the mining sector Xstrata is wanted after RBS raised its rating on the stock from “hold” to “buy”.'

Johnson Matthey reports a strong start to the new financial year. In the first quarter to 30th June 2008 revenues grew by 33%, sales excluding the value of precious metals increased by 12%, and underlying profits rose by 22%.

Mortgage lender Paragon confirmed it has received approaches from parties who have expressed interest in evaluating potential offers for the company. The board has entered exploratory discussions with, and is providing certain due diligence access to, the parties concerned. The FT says the bidder is Blackstone.

Property company Great Portland Estates reported a 4% drop in the value of its properties and said it expects the economic backdrop to worsen during the balance of the year.

After a brief spell in the sun yesterday house-builders are slumping again today with Bovis, Taylor Wimpey, Persimmon and Bellway all sharply lower.

Ukraine-focused oil group Cadogan Petroleum has suspended trading in its shares just a month after it floated due to concerns over the validity of its licences.

Romac Investments has dropped plans to bid for Supporta, sending shares in the outsource group sharply lower.

Fund manager Absolute Capital Management was tipped into the red last year by a massive write-down after discovering a large chunk of its assets were held in illiquid holdings.

Shares in Myhome International slumped after the house cleaning services firm said it breached some of its banking covenants and added that it is considering an equity issue at a discount to the current share price.

Computer games developer SCi expects revenues for the year to be approximately £134m and losses at the EBITDA level are expected to be no more than £100m. The shares rose as it said it ended the financial year with net cash of £2m, which was ahead of internal projections.

Specialty pharmaceutical firm Sinclair Pharma posts a healthy rise after the company said full-year revenues are expected to show a 30% increase on the previous year. The company expects to generate its first positive EBITDA figure since it flotation.

FTSE 100 - Risers
Cairn Energy (CNE) 2,744.00p +6.23%
Lonmin (LMI) 2,662.00p +5.18%
Cadbury (CBRY) 632.00p +4.90%
Carnival (CCL) 1,808.00p +4.81%
Sainsbury (J) (SBRY) 310.00p +4.64%
Johnson Matthey (JMAT) 1,738.00p +4.20%
Petrofac Ltd (PFC) 646.00p +4.19%
Severn Trent (SVT) 1,398.00p +3.79%
United Utilities (UU.) 728.50p +3.19%
Centrica (CNA) 303.25p +3.15%

FTSE 100 - Fallers
Vodafone Group (VOD) 129.00p -13.57%
Enterprise Inns (ETI) 299.50p -13.38%
Friends Provident (FP.) 80.10p -6.64%
Carphone Warehouse Group (CPW) 190.60p -5.53%
Ferrexpo (FXPO) 275.50p -5.16%
Old Mutual (OML) 96.00p -3.81%
BT Group (BT.A) 198.00p -3.53%
Man Group (EMG) 604.50p -3.12%
Xstrata (XTA) 3,423.00p -3.03%
Barclays (BARC) 314.75p -2.85%

FTSE 250 - Risers
IG Group Holdings (IGG) 329.25p +7.95%
Wellstream Holdings (WSM) 1,143.00p +7.53%
Soco International (SIA) 1,441.00p +6.98%
Moneysupermarket.com (MONY) 69.00p +4.55%
Pennon Group (PNN) 658.50p +4.36%
Venture Production (VPC) 798.00p +4.11%
Imperial Energy Corporation (IEC) 1,084.00p +3.83%
Rightmove (RMV) 291.75p +3.37%
Babcock International Group (BAB) 623.00p +3.23%
Savills (SVS) 218.50p +3.19%

FTSE 250 - Fallers
Mecom Group (MEC) 19.25p -14.44%
Bovis Homes Group (BVS) 383.25p -12.90%
Bellway (BWY) 527.00p -11.35%
Taylor Wimpey (TW.) 43.75p -9.79%
Yell Group (YELL) 65.50p -9.66%
Punch Taverns (PUB) 240.00p -9.52%
Mapeley (MAY) 1,100.00p -9.09%
Persimmon (PSN) 326.25p -8.74%
Cattles (CTT) 111.25p -8.25%
Sports Direct International (SPD) 71.00p -7.79%

• News Channel