LONDON (ShareCast) - Footsie finished deep in the red as HBOS, which was up and down like a yo-yo all day, ended 20% lower. Sentiment was also dented by news of a fall in housing starts in the US over August, which sent stocks tumbling on Wall Street.

Confirmation that Lloyds TSB is mulling a bid for HBOS couldn’t keep the Halifax-owner out of the red.

An attempt by the mortgage lender to help its 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. A take-out price of 300p was talked of, but most now think 200p more realistic.

Barclays finished higher though 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.

Members of the Bank of England’s Monetary Policy Committee voted 8-1 in favour of keeping interest rates at 5% earlier this month on concerns about the impact of the weaker pound

Elsewhere, miners lost their early gains. Rio Tinto and the Anglo American are among the biggest losers. Copper prices slipped

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
John Wood Group (WG.) 360.75p +5.25%
Ferrexpo (FXPO) 168.20p +4.28%
Morrison (Wm) Supermarkets (MRW) 256.50p +4.06%
Tesco (TSCO) 372.80p +3.96%
Lonmin (LMI) 2,633.00p +3.58%
Barclays (BARC) 317.75p +3.17%
Invensys (ISYS) 224.25p +2.63%
Sainsbury (J) (SBRY) 361.75p +2.19%
Sage Group (SGE) 208.00p +2.09%
Legal & General Group (LGEN) 89.90p +1.58%

FTSE 100 - Fallers
HBOS (HBOS) 147.10p -19.18%
Kazakhmys (KAZ) 630.00p -10.76%
Royal Bank of Scotland Group (RBS) 169.40p -10.42%
Anglo American (AAL) 2,049.00p -9.26%
Xstrata (XTA) 1,926.00p -8.50%
Whitbread (WTB) 1,046.00p -8.17%
Eurasian Natural Resources (ENRC) 547.00p -7.83%
Antofagasta (ANTO) 423.25p -7.64%
BHP Billiton (BLT) 1,290.00p -6.25%
British Airways (BAY) 243.25p -5.99%

FTSE 250 - Risers
Mecom Group (MEC) 22.50p +114.29%
Amlin (AML) 300.00p +11.73%
Hardy Oil & Gas (HDY) 467.00p +10.93%
Game Group (GMG) 217.00p +8.50%
Randgold Resources (RRS) 1,938.00p +7.67%
Catlin Group (CGL) 320.00p +7.20%
Dairy Crest Group (DCG) 425.00p +6.99%
Informa (INF) 352.25p +6.42%
PV Crystalox Solar (PVCS) 168.50p +6.31%
Helical Bar (HLCL) 347.00p +6.12%

FTSE 250 - Fallers
Johnston Press (JPR) 37.75p -15.17%
ITE Group (ITE) 120.00p -14.13%
Senior (SNR) 85.50p -13.20%
Investec (INVP) 315.75p -12.53%
Aricom (ORE) 23.50p -10.48%
Moneysupermarket.com (MONY) 53.75p -10.04%
Millennium & Copthorne Hotels (MLC) 270.00p -10.00%
Baring Emerging Europe (BEE) 595.00p -9.78%
COLT Telecom Group S.A. (COLT) 98.25p -9.66%
F&C Asset Management (FCAM) 75.25p -9.34%

• News Channel