LONDON (ShareCast) - Footsie ended the morning in credit after a roller-coaster ride that largely mirrored the volatile share price performance of mortgage lender HBOS.

An attempt by the bank to help the shares pull out of their tail-spin initially succeeded this morning, when the company issued a statement saying it is well-funded. However, the bears soon got after the stock again, and at one point the share price was down 50% before new broke of merger talks with Lloyds TSB. The BBC suggested that any take-out price for HBOS is likely to be nearer the 300p the shares were trading at a week ago than the current price.

HBOS and Lloyds TSB have refused to comment on the merger rumours. Lloyds TSB’s share price has reacted positively to the development and is the day’s biggest gainer among blue-chips. HBOS is little changed.

Barclays is another bank showing strength today after it bought Lehman Brothers’ North American investment banking and capital markets businesses for just £140m ($0.25bn) in cash, plus its New York head office at 745 Seventh Avenue and two data centres in New Jersey for £800m ($1.5bn).

In contrast, Bank of Ireland is sharply lower after it decided to slash the full year dividend in half in an effort to cope with “increasingly difficult” trading conditions in the first six months.

Mining stocks are on the rise after metals prices rallied. Rio Tinto and the platinum miner Lonmin are among the top gainers.

Technology company Invensys steams ahead after acquiring Florida-based Quantum Engineering from its management. Quantum, which specialises in signalling and train control equipment, will be integrated into the Invensys Rail Group division.

Insurer Friends Provident has dampened down concerns about its exposure to the collapse of Lehman Brothers. The company said its nominal debt exposure to the fallen US bank is £18m, largely in the form of senior debt.

Retailer Woolworths posted a loss of £99.7m (£63.8m) in the half-year to end July. Sales fell 3% to £1.1bn. "For the first half of the year EUK and 2 entertain are performing ahead of our expectations, while Woolworths Retail manifestly is not," said the firm, which is under takeover threat from Iceland boss Malcolm Walker and Icelandic investor Baugur.

The figures from Woolworths prompted Landsbanki to maintain its ‘reduce’ rating on the stock.

In other broker coverage of the retail sector, JP Morgan has raised its rating on Russian grocery chain operator X5 following declines in the company’s share price.

KBC Peel Hunt has raised its rating on Just Retirement, a company that provides life assurance to pensioners, with a ‘buy’ rating and a 200p target price, following a meeting with its management.

Shares in AIM-listed oil and gas explorer Gold Oil surged Wednesday morning as the company revealed it had received a bid approach.

No-frills airline easyJet expects to see a slowdown in year-on-year growth in revenue per seat in the winter due to the stronger Euro and the softening UK consumer environment.

FTSE 100 - Risers
Lloyds TSB Group (LLOY) 325.25p +16.26%
Barclays (BARC) 341.75p +10.96%
Invensys (ISYS) 237.25p +8.58%
Rio Tinto (RIO) 4,078.00p +5.32%
John Wood Group (WG.) 360.75p +5.25%
Lonmin (LMI) 2,670.00p +5.04%
Standard Life (SL.) 243.25p +4.85%
ICAP (IAP) 424.50p +4.11%
Aviva (AV.) 478.25p +3.97%
Friends Provident (FP.) 84.80p +3.79%

FTSE 100 - Fallers
WPP Group (WPP) 491.00p -3.73%
Royal Bank of Scotland Group (RBS) 183.30p -3.07%
Pearson (PSON) 644.50p -2.35%
London Stock Exchange Group (LSE) 744.50p -2.04%
Reed Elsevier (REL) 559.00p -1.93%
Whitbread (WTB) 1,117.00p -1.93%
Shire Ltd (SHP) 893.00p -1.87%
Liberty International (LII) 935.00p -1.48%
TUI Travel (TT.) 235.50p -1.46%
Land Securities Group (LAND) 1,267.00p -1.40%

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