Miners put a floor under the Footsie

Speculation that the authorities in Japan will not try to halt the yen’s surge forced the dollar down, which in turn triggered a rise in commodity costs.

Gold set a fresh record high of $1,877 an ounce during London’s morning trading before falling back in the afternoon. But the precious metal is still on course for its biggest one-month rise in nearly 12 years in August.

Rising prices gave London-listed gold miner Randgold Resources a boost – up 3 per cent or 195p to 6,610p – while silver miner Fresnillo joined it on the Footsie risers’ board, up 7.1 per cent or 130p at 1,970p. Strength in the mining sector helped the FTSE 100 index to recover some of its earlier losses, ending the day down 1 per cent or 51.47 points at 5,040.76.

The Footsie hit an intra-day low of 4,929.55 in morning trading, following Thursday’s 4.5 per cent drop and heavy overnight falls in the United States and Asia.

Michael Hewson, market analyst at CMC Markets, said: “European markets plunged in the morning, with the German Dax hitting a 21-month low while the FTSE 100 pushed below the 5,000 level before both markets rebounded strongly in the afternoon session.”

The London market lost 5 per cent of its value this week, wiping £72.7 billion from the value of the UK’s biggest companies.

Recession fears and speculation of a short-term funding crisis in the European banking system again hurt financial stocks in London.

Taxpayer-backed Lloyds Banking Group was down 5 per cent, or 1.4p, at 28.4p and Royal Bank of Scotland was also down 5 per cent, or 1.2p lower, at 20.8p. Barclays was off 2 per cent, or 3.5p, at 150.5p although HSBC was up 1.4p at 511p.

Lloyds non-executive directors dipped into their pockets to buy shares, with Anthony Watson buying 50,000 for £14,290 and Anita Frew spending £28,080 on 100,000. Hornbuckle Mitchell Trustees bought a further 100,000 shares for £28,050 for Frew’s pension fund.

Oil prices fell in early trading but rebounded later, Brent crude gaining 2 per cent at $109 a barrel. BP was down 3 per cent, or 10.1p, to 389.9p while Shell fell 33.5p to 1,890.5p. Scots oil stocks also fell, with Edinburgh-based oil and gas explorers Cairn Energy and Bowleven down 5.1p at 281.4p and 2.25p at 115.75p respectively. Aberdeen-based energy services company Wood Group was down 3.6 per cent or 19p at 507.5p.

One of the few rays of light for investors came from the technology sector after Thursday night’s announcement that American computing giant Hewlett-Packard planned to buy UK software firm Autonomy in a £7.1bn deal. Autonomy shares jumped 72 per cent or 1,023p to end the day at 2,452p.

There was also a gain for Perth-based transport group Stagecoach after the company unveiled its second huge cash handout for shareholders in four years. The £340m payout, which will mean a windfall of £51m for chief executive and co-founder Sir Brian Souter, caused shares in the Megabus operator to lift 1.5p to 233.4p.