Institutions lift Halifax shares

Halifax's new shareholders received a welcome boost yesterday as institutional buying ahead of Monday's entry into the FTSE 100 index of leading companies sent the shares to their highest level since flotation. Alliance & Leicester, which also joins the top flight on Monday, enjoyed a similar jump, although it fell back in late trading to close only marginally higher.

Halifax added 25p to close at 770p, having touched a high of 783p at one point, while A&L rose 4p to 603p, having jumped 26.5p to 625.5p at its best. Other bank shares paid the price, as big investors sold out of the sector's other stocks to fund their purchases. Abbey National, down 27.5p to 804.5p, was a notable victim as investors switched into Halifax, which shares its exposure to the mortgage market.

The flight to the former building societies failed to rub off on the grey market for Woolwich shares, however. With two weeks to go before the summer's next building society conversion, City bookmakers were yesterday reporting increasing pessimism about the society's stock market debut.

Just like an equity market maker, City bookmakers post a price at which they will buy or sell a given event, in this case the closing price of Woolwich shares on the first day of dealings. Once they have opened their book, the balance of buyers and sellers determines whether the price moves up or down.

Having opened its book with a spread of 335p to 343p, City Index said its clients had consistently bet on a lower closing price when dealings begin on 7 July. In a bid to find buyers, City Index had reduced its spread to 310p to 318p by yesterday afternoon.

The bearish tone of the bookmaker's clients mirrored a recent change of heart in the City, where bank shares have quickly fallen out of favour with investors. That has partly reflected a worry that demand from index tracker funds had driven the sector up to unsustainable heights, but sentiment has also been hit this week by the abrupt resignation of Martin Owen, the chief executive of NatWest Markets.

Barclays and NatWest, NatWest Markets' parent, were both weaker as investors continued to steer clear of retail banks with a stake in the volatile investment banking market. Barclays dipped 37.5p to 1163.5p. NatWest fell another 5p to 746.5p.