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Banks staged a charge today on the back of Barclays' reassurances that it continues to trade profitably.
Barclays led the way with a rise of 14.3p to 65.5p, having slumped to a record low of 51.2p on Friday after nine consecutive trading days of falls had seen it lose more than 70% of its value. It was joined by Lloyds Banking, up 7.7p at 57p, and Royal Bank of Scotland, 0.9p ahead at 13p. But trust between the stock market and the banks is a precious commodity these days, and there was little evidence to suggest this may be a turning point in investors' fortunes.
The FTSE 100 index traded within a narrow range before settling just 16.6 points higher at 4069.0.
Oil services group Petrofac made strong gains after winning a $2.3 billion (£1.7 billion) contract to help develop an Abu Dhabi oilfield.
The shares responded with a rise of 62p to 413½p. Evolution Securities says companies that have exposure to the Middle East can still do pretty well despite falling oil prices.
Citigroup has taken its red pencil to the rating of mining giants BHP Billiton, off 12p at 1153p, and Xstrata, down 20p at 660p. It has cut BHP from buy to hold and lowered its target from 1530p to 1260p, while Xstrata is dropped from hold to sell with the target slashed from 900p to 635p to reflect the economic slowdown and falling commodity prices better.
Citi says Xstrata has seen a big rise in its cost base compared with those of its rivals. BHP, it adds, has performed well of late, and the scope for further improvement in its shares is limited. It expects copper, aluminium, zinc and nickel prices to carry on falling.
One story doing the rounds after the close of business on Friday claimed that Rio Tinto may turn to shareholders with terms of a major refunding at 900p a share. That is said to form part of a plan to reduce debt to $10 billion this year. The group has already announced plans to sell aluminium division Alcan Ningxia for $125 million. But the share price has come rattling back since BHP last year decided against making an offer for Rio of about 6000p a share. The price today fell 22p to 1501p.
On AIM, shares of property services supplier Speymill were suspended at 10¼p pending clarification of the company's financial position. Also on AIM, shares of Bioganix were frozen at 3½p. Takeover talks with various suitors have been terminated, with no one prepared to make an offer. However, there is an offer on the table for the operating company to be sold as a going concern.
Shares of shoe retailer Stylo were suspended at 3¾p while the company explores various options open to it.
Share prices in Tokyo lost ground this morning. Gains by Kyocera bolstered the market but a profit warning from Komatsu fanned worries about company earnings, capping gains.
Investors snapped up battered shipping firms on the view they had been oversold, and on hopes that Chinese imports may be picking up. Drug firms and other defensive shares rose. But the biggest drag on shares came from fears about earnings as Japan's corporate results season moves into high gear, with Sony due to announce on Thursday after last week warning of massive losses.
“This week we have one set of results after another, and Komatsu's warning has scared investors,” said Takashi Ushio, head of the investment strategy division at Marusan Securities. “We know this results season will be bad, and this is inhibiting buying.”
The Nikkei Average ended down 63.11 points at 7682.14 after earlier touching a two-month low of 7675.81.
Meanwhile, the yen retreated, with some market players saying risk aversion was easing a bit. The dollar was up 0.5% against the Japanese currency at 89.21 yen, but off earlier highs.
Hong Kong currency and debt markets are closed for the Lunar New Year holidays, and will reopen on Thursday. The Hang Seng index closed down 79.39 points at 12,578.60 on Friday.
