Market Report: Alliance & Leicester heads banking recovery

Financial stocks mounted a comeback on the FTSE 100 yesterday. After suffering in the wake of problems at the American investment bank Bear Stearns, banking stocks were buoyed as their representatives met with the Bank of England on Thursday afternoon.

Alliance & Leicester was the best of the lot, gaining 7.28 per cent or 36.50p to 538p, climbing to third place on the leader board. HBOS also swung into the top 10, to fourth place, adding 6.16 per cent or 27.50p to 473.75p.

Others in the sector, including Lloyds TSB, which was firmer by 1.58 per cent or 6.75p to 434p, Barclays, which gained 1.48 per cent or 6.25p to 429p, HSBC, which added almost 1 per cent or 7.50p to 806.50p, and Royal Bank of Scotland, which gained 1.50 per cent or 4.75p to 321.25p, were also up as investors expressed confidence ahead of the Easter holiday.

Mining stocks, on the other hand, fell by the wayside as risk reduction drove commodities lower. Anglo American was at the bottom of the FTSE 100, shedding 8.11 per cent or 236p to 2,673p, while Antofagasta, at second place on the loser board, was down 6.68 per cent or 44.50p to 622p.

Xstrata, which has long kept investors and traders busy with speculation regarding a prospective takeover offer from Brazilian rival Vale, shed 6.27 per cent or 233p to 3,483p.

Elsewhere, BHP Billiton, which lost 5.55 per cent or 80p to 1361p, Kazakhmys, which was down 6.21 per cent or 95p to 1,435p, and Rio Tinto, which lost 5.33 per cent or 270p to 4,800p, were also weak.

Analysts at Cazenove were cool about the sell-off, suggesting that "those whose investment horizons are measured in months rather than weeks" should "view this sell-off as a buying opportunity".

Overall, the FTSE 100 closed down 50.4 points, or 0.9 per cent, at 5,495.2. It was a quiet day on the London benchmark as investors and traders tired, no doubt, by the tumult of the past few days, prepared for the Easter long weekend.

Beyond the mining sector, the index was also dragged down by energy stocks, which fell on the back of a weaker oil price. Cairn Energy was the worst off, down 6.56 per cent or 178p to 2,535p, at third place on the loser board. BG Group shed 2.54 per cent or 27p to 1,037p.

The FTSE 250 was down, shedding 102.8 points, or 1.1 per cent, to 9,448.40.

On the FTSE 250, New Star Asset Management gained 7.35 per cent or 6.25p to 91.25p after publishing in-line results. The troubled fund manager also signalled an improvement in trading, commenting: "While the trading environment remains challenging, there are early signs that at least conditions are no longer deteriorating."

Shaftesbury was down 0.18 per cent or 1p at 565p. The share price slipped as investors waited for more news from Laxey Partners, and its Terra Catalyst Fund, which has reportedly picked up an almost 12 per cent stake in the property company.

Restaurant Group was up, staying firm on the back of continued speculation that rivals Tragus or Gondola Holdings were securing a stake in the company.

The talk was vague, bearing no clues about Tragus or Gondola's intentions, nor any details about the size of the supposed stake. Restaurant Group closed up 2.14 per cent or 3p at 143.25.

EasyJet recovered from Wednesday's lows – shares in the discount airline operator suffered after it expressed concern about the rising price of oil. Investors keen to pick up bargains piled in yesterday, taking easyJet to fourth place on the FTSE 250 leader board, to 359.50p, up 5.97 per cent or 20.25p.

On AIM, Premier Research gained 7.30 per cent or 6.50p to 95.50p after receiving an offer from Pegasus Bidco, an acquisition vehicle backed, among others, by the private equity group ECI and the management of the company.

The 100p-per-share offer values Premier at £60.1m, offering a premium of 50 per cent on the volume-weighted average share price of the company over the three months to 18 March.

Enegi Oil made its market debut yesterday. The company, which is currently focused on the petroleum in Canada's western Newfoundland region, was admitted to trading at a placing price of 181p per share, capitalised at £55m. Cenkos Securities and Fox-Davies Capital acted as joint brokers. By close, the shares had gained 5p to 186p.

Sweet China was readmitted to AIM following its acquisition of Essential Box Confectionery, which has bought the company three Chinese-made brands, including Jessica Walker, which was launched in Australia in the spring of 2005, and Candycraft, which makes novelty confectionery items. Thirty million ordinary shares of 1p each, full paid at 9p per share, were placed yesterday, raising £2.01m. Sweet China closed at 10p.