LONDON'S benchmark FTSE 100 index enjoyed another positive session as investors took heart from bank rescue plans.
The Footsie followed its soaraway 8 per cent rise on Monday with a solid 3 per cent advance, underpinned by gains for commodities st
ocks as traders hoped the global bail-outs could avert a global slowdown. Some £33 billion was added to the value of Britain's 100 biggest companies.
The blue-chip index was up as much as 6.5 per cent at one stage but eventually closed 137.3 points higher at 4,394.2 amid early volatility in US markets.
Justin Urquhart Stewart, a director of Seven Investment Management, warned amateur investors to expect further volatility. "Please be careful," he said. "These are erratic and dangerous times.
"Inflation is high, the global economy is slowing and the banking crisis is still around. If you make a profit on short-term investments, then bank it."
The Dow's 11 per cent gain on Monday and a 14 per cent rise overnight for Japan's Nikkei 225 meant trading in London began on the front foot yesterday.
The UK's leading banks remained in the spotlight and saw contrasting fortunes as the market chewed over the £37bn recapitalisation plans announced on Monday.
Royal Bank of Scotland, which is in line to receive £20bn, was up for much of the day, but slipped 0.7p to 65p as the market faltered towards the end of the session. This is below the 65.5p price of the £15bn in new shares it will offer existing shareholders.
Merger partners HBOS and Lloyds TSB were also out of favour as investors weighed up a huge government stake and a lack of cash dividends in the near future.
HBOS was down 4.7p at 85.3p, a fall of 5 per cent, while Lloyds TSB – the leading Footsie faller – was 10.7p lower at 151.3p.
Barclays, which does not intend to use government cash to bolster its capital position, enjoyed better fortunes. The stock raced to the top of the risers' board with a 14 per cent surge, adding 30.75p to 246p.
Another boost to trading came from oil companies amid hopes that this week's developments will go some way to propping up demand.
Oil prices were up by more than $3 to $84 a barrel easing back to about the $80 mark. Index heavyweight BP rose almost 7 per cent or 28.5p to 446.75p and Royal Dutch Shell by 64p to 1,451p. Prospector Tullow Oil was up almost 16 per cent at one point but finished 45.5p better at 559p, a rise of 9 per cent.
In corporate news, chocolate firm Cadbury made strong gains after posting a 6 per cent rise in third-quarter revenues. Panmure Gordon said the performance suggested that the company's product range was strong enough to weather the economic storm. Shares rose 9.25p to 508p. Whitbread also made gains, up 24.5p to 994p, after it reported a 24 per cent rise in half-year profits and said it continued to make good progress.
The full article contains 537 words and appears in The Scotsman newspaper.
