Today's rally has proved shortlived, with mortgage banks Northern Rock and Alliance & Leicester proving a drag on the market.
The early euphoria around Northern Rock and the government's move to guarantee more of its liabilities has now faded. Does anyone still think there will be much left for shareholders at the end of all this? Clearly hedge fund SRM Global does, since it has raised its stake from 9.29% to 9.51%. Maybe SRM is right, but it's a big gamble, and one other investors are hesitant to take, given that Northern Rock's shares have moved from a 4% rise to a 4% loss, closing at 86.9p.
As for Alliance, it lost 23p to 635.5p after Moody's said it may downgrade the bank's credit rating.
As a result the FTSE 100's early gains are a thing of the past, and with Wall Street lower too, the leading index closed just 1.5 points higher at 6279.3.
Inevitably, things are winding down for Christmas but there is still a fragility about the market. The FTSE 100, despite the credit crunch, is ahead for the year - but the year is not over yet.
