LONDON (ShareCast) - London's blue chips slipped into the red late on after another day of big swings as investors grappled with the implications of Lloyds TSB's acquisition of HBOS.

HBOS was the star performer after Lloyds TSB rode to the rescue with a £12.2bn for the Halifax owner that will create a UK “Super Bank” worth about £28bn. HBOS shareholders will get 0.83 Lloyds shares for every HBOS share held.

Lloyds shares went into reverse though with other banks also lower. Barclays, Royal Bank of Scotland and Bradford & Bingley all suffered on a combination of funding and competition fears.

Elsewhere in the banking sector HSBC seems to have spent the last two days denying it is on the acquisition trail. Today an unnamed insider denied a report on US TV channel CNBC that it is considering the purchase of US investment bank Morgan Stanley.

Bank of Ireland, which yesterday announced a dividend cut, holds steady today even after JP Morgan slashed its target price on the bank to €2.70 from €4.30.

British Airways hit turbulence on pensions fears and rising oil prices. The BA pension schemes have a £1.74bn hole in them, the trustees announced today in their annual update. A surge in crude prices to above $100 a barrel also raised fuel costs concerns, though Ryanair was more sanguine, saying it would break even at $100 per barrel.

Housebuilders rejoiced at the Lloyds/HBOS deal, which secures the future of HBOS, a major lender to UK housebuilders, as well as the commercial property industry. Persimmon and Barratt Developments both racked up double-digit percentage gains.

DIY retailer Kingfisher saw retail sales rise 2.5% in the 26 weeks ended 2 August, but fall 2.6% on alike for like basis. Pre-tax profit fell 3.7% to £206m from £214m a year ago on sales up 11.1% to £5.13bn.

Tate & Lyle said it continues to trade satisfactorily and expects profits from the group's continuing operations in the first half to be broadly in line with the corresponding period.

Insurer Old Mutual tumbled as it revealed $237m of exposure to battered US peer American International Group. It has $76m of senior debt through Old Mutual US Life, $84m in insurance policies and $77m of subordinated and hybrid debt.

Hochschild Mining rallied as gold posted its biggest percentage daily gain in 26 years as investors scrambled for safe havens to escape the US banking crisis.

Building and civil engineering group Kier reported a 12.2% rise in underlying pre-tax profit for the full-year, but said the market for its housing business has been tough with 18.6% fewer sales achieved and a continuing deterioration in reservation levels.

Construction and regeneration group Morgan Sindall has been selected by North Lanarkshire Council as one of three framework contractors on the council’s schools modernisation scheme. The four-year contract is worth in the region of £100m.

Military decoy producer Chemring said its order book has increased to a record £448m, which is 53% higher than at this time last year. Year to date revenues are 38% up and operating cash flow 63% above the same period last year.

Instrumentation and controls firm Spectris is to acquire the assets of Siemens AG’s Machine Vision Business for $11.5m. The acquired company is an industry leader in automatic identification and data capture.

Animal biotechnology company Genus is to lease a new 600 sow pig farm in China. The new herd will function primarily as a sire line nucleus, producing a range of high-performance boars to maximise the rate for multiplication of elite genetics to be used by China's leading pork producers.

Landsbanki maintained its ‘buy’ rating on Genus after the announcement saying it ‘puts flesh’ on the company’s growth plans.

Royal Bank of Scotland has lowered its rating on the bus and rail operator Go-Ahead to ‘add’ from ‘buy’, saying fuel costs and other expenses will have a bigger impact in 2009.

Life sciences company BTG has made an agreed bid for drug developer Protherics. Protherics shareholders are being offered 0.291 new BTG shares for every Protherics share held in a deal that values the whole of Protherics at around £218.1m.

Industrial fastenings distributor Trifast warned that the outcome for the year to 31 March 2009 is likely to be well below current market expectations.

Electronic components distributor Abacus Group warned that full year sales will be slightly lower than during 2007 and below its previous expectations, but cheered up shareholders with the revelation that it is discussions with a number of parties interested in buying Abacus.

Fixed income fund manager BlueBay Asset Management achieved record growth in assets under management in the year to end-June, but pre-tax profits dipped as difficult market conditions resulted in a performance fee income being halved.

Nickel and platinum miner Braemore Resources was clearly alarmed by the sharp share price fall that followed its downbeat earnings statement, and moved to reassure investors today by saying it continues to be well financed.

GNE shareholders celebrated as it sold its main operating subsidiary, Petrol Express (PEX) to a private investment group called Leopard No. 2 Investments, for £51.56m. Assuming the deal is approved by the shareholders the company intends to pay a special dividend of 150p per share no later than January 2009.

FTSE 100 - Risers
HBOS (HBOS) 172.60p +17.34%
Drax Group (DRX) 803.50p +10.75%
Kingfisher (KGF) 131.40p +9.68%
London Stock Exchange Group (LSE) 790.00p +7.85%
Carphone Warehouse Group (CPW) 181.10p +7.80%

FTSE 100 - Fallers
Old Mutual (OML) 69.00p -15.54%
Lloyds TSB Group (LLOY) 237.50p -15.10%
British Airways (BAY) 217.00p -10.79%
Man Group (EMG) 405.25p -8.52%
Barclays (BARC) 301.00p -5.27%

FTSE 250 - Risers
Hochschild Mining (HOC) 260.00p +25.15%
Heritage Oil (HOIL) 240.00p +17.65%
Brit Insurance Holding (BRE) 210.75p +14.54%
CSR (CSR) 289.00p +13.22%
Randgold Resources (RRS) 2,194.00p +13.21%

FTSE 250 - Fallers
Misys (MSY) 118.50p -15.36%
Northgate (NTG) 211.25p -14.82%
Bradford & Bingley (BB.) 25.00p -13.79%
F&C Asset Management (FCAM) 65.00p -13.62%
Millennium & Copthorne Hotels (MLC) 242.50p -10.19%

• News Channel