Stock market back on its feet after last week's whirlwind

Although the FTSE-100 failed to follow the lead of Asian markets and had slipped 8.58 points to 5302.75 by mid-afternoon, there was none of the panic of last week.

It follows the record eight per cent rise on Friday in the wake of the US government's plan to soak up $700 billion worth of 'toxic' mortgage debts held by banks.

Wall Street fell in early trading this afternoon, however, as investors waiting nervously for more news on the emergency plans outlined before the weekend.

Holding firm: The FTSE slipped slightly today but appeared to be far more stable

In the first hour of trading, the Dow Jones industrial average fell 102.34, or 0.90 percent, to 11,286.10.

Traders are relieved action is being taken but appear still uncertain about how successful U.S. Treasury Secretary Hank Paulson's plans will be in easing the crisis.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 14.24, or one per cent and the Nasdaq composite index fell 25.50, or 1.12 percent.

Back in the UK, the FTSE held largely firm throughout the day in comparison to the intense volatility of last week's trading.

Halifax owner HBOS, which was forced into a £12.2bn rescue takeover by Lloyds TSB last week, saw its shares fall to 213.50p, down more than four per cent.

But shares in Bradford & Bingley, seen as the weakest remaining independent British bank, were up more than eight per cent to 30.00p on reports that the Financial Services Authority is drawing up contingency plans if its shares slide alarmingly again.

There was also new hope for hundreds of workers at collapsed Lehman Brothers in London with reports that bidders, including Barclays and Japanese bank Nomura, are interested in snapping up parts of the Canary Wharf-based investment bank.

The corporate finance and equity trading divisions are said to be the most likely to find a new home.

PricewaterhouseCoopers, the administrators of Lehmans in London, are demanding the return of $8 billion transferred to New York on the Friday before the bank's collapse a week ago.

But despite the continuing 'clear-up' after last week's extraordinary financial hurricane, there was bad news from the real economy.

Property website Rightmove reported that asking prices for homes fell one per cent this month, the fourth successive decline.

Meanwhile, Ray Boulger of mortgage brokers John Charcol warned that fixed rate mortgage rates could jump by as much as 0.25 per cent this week in a reaction to shocks such as the fall of Lehmans and the near disasters at HBOS and insurance group AIG.

This would reverse the trend of recent weeks when mortgage rates have fallen as conditions in the interbank lending markets have gradually eased on premature hopes that the credit crunch was past the worst.

In overnight trading in Asia, Tokyo's Nikkei 225 rose 169.73 points, or 1.4 per cent, to 12,090.59, while the Hang Seng in Hong Kong was up 130.13 points to 19457.86.

In Britain, analysts said the measures rushed out by governments last week  -  including a temporary ban on short selling of banks in Britain and America as well as the US bank bail-out  -  appeared to have stopped the rot for now.

Richard Hunter, head of UK equities at brokers Hargreaves Lansdown, said: 'Regardless of the US package, there are a number of factors that haven't gone away.

'There is the concern about the slowdown in the US economy, and indeed the UK economy.'