A triple helping of good news put the spark into Babcock International today.

Shares in the engineering group leapt more than 16% or 66¾p to 478¾p, making them the biggest winners of the mid-tiers, as it lifted its dividend by a quarter, struck a deal to manage its pensions liabilities and said its order book is up by about 90% on last year to a record £5.7 billion.

Babcock, which specialises in the marine, defence and nuclear sectors and whose main UK customer is the Government, raked in pre-tax profits of £120.9 million, 27% higher than last year.

Brokers KBC Peel Hunt and Numis both advised snapping up the stock.

Babcock has agreed a deal in principle to manage £500 million in pension liabilities through a longevity swap programme, to protect it from the effects of members of the scheme living longer. This could be good news for BT, up 1.3p to 94.8p.

Talk in the market is that the telecoms giant, which is expected to reveal up to an £8 billion pensions black hole on Thursday at its quarterly results, might be able to do the same.

Shares in London lost ground for the second day as a result of losses from the banks and miners. The FTSE 100 index fell 12.26 points to 4423.24 in volatile trading.

A trader said that although most investors are more optimistic than of late, many are sitting on the sidelines, still trying to determine whether the recent rally is really the start of a longer bull run or whether this recent slide might signal the end of the spring rally.

Investors on the street of dreams were likewise feeling uneasy, with the Dow losing opening gains to trade down 8.84 points at 8409.93.

Profit-taking in financials filtered across from the US after four more banks in the States said last night that they are looking to raise fresh funds.

Sentiment towards the banks was not helped by a note from Credit Suisse, which warned that while investment banking and impairment charges hogged the limelight in the recent bank reporting season, more attention should have been paid to margins.

The broker's banking analyst Jonathan Pierce warned that the liquidity buffer, other regulatory changes and lower rates will substantially hold back profit growth in years to come.

The broker has upped its price target for state-owned Royal Bank of Scotland from 25p to 30p, Lloyds Banking Group from 45p to 65p and Barclays from 170p to 285p.

But RBS and Lloyds are trading well above these levels, leaving the stocks looking dear. So Credit Suisse has given them an underperform rating and today cut Barclays to neutral from outperform.

This sparked a sell-off, with Lloyds dropping 8.6p to 90.7p to be the worst-performing Footsie stock. Barclays gave up 17¼p to 269¾ and RBS dropped 2.4p to 43.7p.

If you go on a retail-sector spree, Nomura suggests you be careful what you buy. The broker has downgraded the sector to neutral, pointing out that all the green-shoots talk has helped retailers to outperform the Footsie in recent months, meaning that many are no longer looking cheap.

Analysts advise taking profits in Kingfisher, up 1.9p at 179.3p, Comet owner Kesa, 1¾p cheaper at 117¼p, clothing chain Next, 45p higher at 1552p and WH Smith, 1p better at 429p.

But it still likes companies with “self-help” strategies, such as suffering High Street chain Marks & Spencer and Currys and PC World owner DSG International, keeping both as buys.

Nomura has set a 53p price target for DSG, which lost 1¾p to 37¼p and a 380p price target for M&S, which today gained 3¾p to 332¾p.

The god of black gold continues to be kind to Tullow Oil, which today told a tale of its drilling success. The Africa-focused explorer said its Ugandan field could produce more than a billion barrels of crude.

The latest well, in the Victoria Nile Delta, added about 55 million barrels, and Tullow said this has increased the odds of its striking lucky in neighbouring wells later this year.

Shares in the group, which said at its annual general meeting today that trading remains on track, put on 4p to 900p, as a number of brokers rated the company as a buy.

African Copper, the mining tiddler, soared 6¼p to 14½p as mining investment company Zambia Copper said its $22.5 million (£14.8 million) financing package for the explorer is now a step closer to completion.