After early loss of nerve FTSE regains its composure

THE London market staged a rally in afternoon trading, recouping some of its losses from earlier in the session following falls in China overnight.

Investors were exercising caution after the Shanghai composite index slumped by more than 6 per cent in the wake of the Chinese government imposing a tax on stock trades in an effort to cool the booming market.

However, a firm opening on Wall Street helped allay traders' concerns to see the FTSE 100 index close down only 4.4 points at 6,602.1.

Earlier in the day, the benchmark index had fallen by as much as 1 per cent.

Insurer Resolution was the session's biggest loser after it announced possible job losses and its shares turned ex-dividend, meaning that investors are not entitled to the latest dividend payment. Its shares were down 18p at 627p.

Fellow insurer Prudential was also on the back foot following a downgrade from ING Bank, which downplayed hopes of a lucrative break-up of the group and rated its shares - off 7.5p at 756.7p - expensive against the sector average.

Friends Provident slipped 2.75p to 197.5p and Royal and Sun Alliance was down 2.6p at 159p as it went ex-dividend.

Property companies featured heavily on the risers' board, with Land Securities leading the pack. The shares rose 34p to 1,888p, boosted by director share-buying. British Land followed its lead, up 25p at 1,425p.

Mining shares enjoyed a lift amid buoyant base metal prices.

Kazakhmys was ahead 16p at 1,259p and Xstrata gained 23p to 278p. Antofagasta cheered 4.5p to 544.5p after it posted a 19 per cent rise in first-quarter earnings on higher copper prices.

Outsourcing group Capita climbed 9.5p to 728p after the firm announced a 12-year contract with Resolution worth 580 million.

IT firm LogicaCMG moved higher with a gain of 4 per cent amid reports of a possible bid from private equity firm Permira. The shares were ahead 6.25p at 167.75p.

Capital Radio and Classic FM parent group GCap Media saw its share price dive 14 per cent, or 36p to 222.5p, after reporting that its full-year underlying profits were down 35 per cent at 14.4m and announcing a cut in final dividend from 6.15p to 1.5p.

Northern Foods' full-year profit met expectations at 40m, but the biscuit and pizza maker added that tough trading conditions in the biscuits market had persisted. Its shares fell 0.75p to 131.25p.

Online gaming firm 888 said it was trading in line with expectations after an encouraging start to the financial year.

Its shares fell 2.25p - or 2 per cent - to 112.75p.

Mortgage lenders were unsettled by a gloomy trading statement from Kensington, though it softened the blow by agreeing a takeover by South African bank Investec for 519.5p per share. Kensington closed down 8p at 482p, while Investec lost 33p to 672p.