London close: Late rally saves Footsie
London moved into blue territory just before the close as Northern Rock staged a rally after a consortium led by Richard Branson's Virgin Group submitted a proposal that would see the injection of "substantial new equity" into the troubled mortgage lender.
Under the proposed deal, "a substantial cash sum will be injected into the company for new equity to be issued at a discount to the current share price," Virgin said in a statement.
Fund manager Schroders and hedge fund manager Man Group were down in the dumps following last night's slip on Wall Street. High street banks Lloyds TSB, Barclays and HSBC were also in the red.
Barclays fell even though it said that profits during September at its investment banking division Barclays Capital were "substantially" ahead of the previous two months. "Year to date performance through September at Barclays Capital, Barclays Global Investors and Barclays Wealth was strong with income and profits well ahead of last year," said Barclays president Bob Diamond.
Oil users British Airways and Carnival were under pressure after US crude futures jumped through $83 in New York on weaker crude stockpiles, although this gave BP, Shell and BG a boost.
BP received a further lift as analysts pore over chief executive Tony Hayward's plans for a "fundamental shift" in the way the oil giant operates around the world. Substantial job cuts are likely.
Life group Resolution was rumoured to have attracted the attention of the world's largest reinsurer, Swiss Re, while Standard Life was also said to be lining up an approach. Other life groups were up in sympathy.
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Meanwhile, housebuilders Barratt Developments, Persimmon and Taylor Wimpey turned lower. A survey showed the number of first time home buyers down by a fifth in the last six months. Bovis Homes bought Elite Homes Group Limited from its existing directors and related trusts for £25.7m in cash plus the assumption of £46.2m of net debt.
Leisure group Rank says full year operating profit will be "significantly" lower than in 2006 if the disappointing levels of recent weeks' trading continue to the end of the year.
Elsewhere, Renishaw's first quarter trading is in line with expectations with first-quarter revenue and sales both ahead year-on-year. The high-tech measuring equipment maker said the improvement is despite adverse currency effects, the absence of sales to a Japanese customer for regulatory reasons and a flood at the Woodchester production facility in July.
Architect groups SMC and Aukett Fitzroy Robinson failed to agree satisfactory terms for a takeover of SMC and discussions have ended. SMC added that it has entered separate discussions with a private equity backed third party over a potential offer for the group.
Insurance broker group Broker Network received an approach, which may or may not lead to an offer for the company.
International testing business Inspicio also received approaches from interested parties, which may or may not lead to an offer being made for the company. The admission follows a 35% increase in the group's share price over the past month to a new all-time high.
Life insurance and pensions software specialist Focus Solutions has traded profitably in the first half for the first time and expects to report both turnover and profitability "significantly" ahead of last year.
