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Stock Market steers a steady course after last week's whirlwind
Jonathan Prynn, Consumer Affairs Editor22 Sep 2008
The Stock Market held its nerve today as a calmer City tried to move on from last week's unprecedented gyrations in the financial markets.
Although the FTSE-100 failed to follow the lead of Asian markets and slipped 27.06 points to 5284.24 in early trading, 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 $700billion worth of "toxic" mortgage debts held by banks.
Halifax owner HBOS, which was forced into a £12.2 billion rescue takeover by Lloyds TSB at the height of the turmoil last week, saw its shares fall 11p to 211.5p.
But shares in Bradford & Bingley, seen as the weakest remaining independent British bank, surged 11 per cent or 3.75p to 31p on reports that the Financial Services Authority is drawing up contingency plans if its shares slide alarmingly again.
Meanwhile there was 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 administratorsof 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.
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.
Thomas Lam, a senior economist at Singapore's United Overseas Bank, said: "This should stem the bleeding, but the patient is still very fragile."
