FTSE is propped up as masonry falls all around

MINING and drug shares provided a vital prop to the London stock market yesterday as further mortgage-related shocks from across the Atlantic late in the afternoon threatened to wipe out earlier gains.

The FTSE 100 index closed 20.8 points higher at 6,356.5. But it was yet another trading session in which strong gains by the likes of Lonmin and AstraZeneca masked serious further bloodletting in domestic sectors such as house builders and retailers.

Smaller company shares look to be in a fully fledged bear market and it is hard to escape the impression that the FTSE 100 itself is being hollowed out from within.

Any weakness in mining or oils could see this main index tumbling sharply.

The FTSE had been 47 points higher earlier in the day before vicious rumours – later denied – that America's biggest mortgage company was facing bankruptcy – brought sharp reversals both on Wall Street and in London.

The strongest performer in London was medical devices group Smith & Nephew, whose shares climbed 7 per cent or 43.5p to 640p, topping the Footsie leader board. Close behind was drug giant GlaxoSmithKline, up 40p to 1,361p, and AstraZeneca, 64p firmer at 2,234p as traders turned to steadier sectors.

Strong metals prices helped Lonmin gain 117p to 3,262p and Kazakhmys rise 44p to 1,335p, providing further buoyancy to the key index.

But the claws of the bear were brutally in evidence elsewhere. Housebuilders were savaged again, this time on figures from the Halifax showing a 1.8 fall in values during the final three months of 2007 – the first quarterly drop since the second quarter of 2000.

Persimmon was badly affected, down 5 per cent, or 33.5p at 651.5p, taking the fall since the 2007 peak to 57 per cent. Taylor Wimpey sank 5 per cent to 171.1p, taking the damage since the peak to 68 per cent. And Barratt, no longer a FTSE 100 constituent, surrendered a further 6.3 per cent to 362p, extending the collapse in the shares of one of Britain's best-known housebuilders to a staggering 72.4 per cent.

The leading Footsie faller was Yellow Pages publisher Yell Group, downgraded by brokers at UBS amid concerns over economic conditions putting long-term pressure on directories. Yell was off 6 per cent or 21.25p to 321.75p.

Marks & Spencer gained 5p to 503.5p despite low expectations for festive sales figures today, while fashion retailer Next, which has suffered in the past week amid a gloomy outlook, rose 11p to 1,407p.

Among smaller stocks, Domino's Pizza was up 3p to 178p after delivering a 17.6 per cent festive surge in sales.

FTSE 250 airline EasyJet endured hefty falls after its December passenger statistics showed a 2.2 per cent drop in its load factor. The shares fell 14 per cent or 74.25p, to 460.25p.