4.50pm market close
A recovery in the banking sector was enough to keep the market in positive territory today.
After last week's turmoil in their share prices, both Royal Bank of Scotland and Barclays rose sharply. RBS added 9% and Barclays 8%, with traders saying there may be a number of short positions in the two banks being closed.
The reassuring noises made over the weekend - including Barclays chief executive John Varley reportedly saying that the lack of an official stock exchange announcement from the bank meant there were no major black holes in its accounts - seemed to help things, for the moment at least.
But Alex Potter at Collins Stewart pointed out: "The reputational and legal risks of making such statements if subsequently found to be untrue are obvious. Senior management [at Barclays] is clearly putting a lot at stake.
"Such soft denials are useful but we continue to believe that such rumours will resurface as the bear raids continue. The lack of information is the key issue. UK banks' reporting leaves obvious voids in the flow of information - rightly or wrongly - and trading statements' lack of hard data does not help much. Barclays next release will be a trading statement, due on November 27, which will give some short-term relief. But, for hard data, we have to wait until February 19 - or even later for the annual report."
So with the banks leading the way, the FTSE 100 closed 33 points higher at 6337.9, while the FTSE 250 rose 35.2 points to 10,894.3.
Falling commodity prices left the miners weaker, however. The sector accounted for six of the top 10 fallers in the leading index.
3.40 update
One bank not sharing in today's financial rally is HSBC, with investors nervous ahead of a trading update on Wednesday.
The update will include third quarter figures from HSBC's American operations, and traders will be keen to hear what it has to say about the US sub-prime problems. There is already talk that it might announce a $1bn write-down.
Ryan Kneale, market analyst at financial bookmakers BetsForTraders, said: "It will certainly be interesting to see what HSBC brings to the table on Wednesday. Currently there is a lot of market talk that HSBC will be announcing a write-down somewhere in the scale of $1 billion, which will no doubt take the equity markets lower.
"HSBC's shares have held up much better than their counterparts during the chaos of the last week or two and I believe any surprise write-downs will spell bad news, not only for HSBC but for the British banking sector in general."
Clients at BetsForTraders are mainly shorting HSBC, with 71% betting for further falls in the price. So far today they are down 2p at 838.5p. This may not sound much but it compares badly compared to the rest of the sector. Royal Bank of Scotland, for example, is up 8%, Barclays is 6% higher and even Northern Rock - where there is still a chance shareholders will end up with little or nothing - has climbed 6.6%.
But the miners - Rio Tinto aside - are holding things back at the moment, thanks to weaker commodity prices. Vedanta Resources is 6.5% lower and Anglo American, where there has been some vague talk it could be stakebuilding in Rio, was down 5.5%.
12.50 update
Plumes of black smoke over London spooked the markets at lunchtime, although police indicated the incident looked like a fire not a terrorist attack.
But TV pictures of London landmarks with smoke behind them were not what nervous investors on either side of the Atlantic wanted to see. So after a surprise 60 point rise this morning despite falls overnight in Asia, the FTSE 100 index lost most of its gains and the US futures fell back after reports of the East London fire started coming in.
Still, banks held onto most of their gains, while among the losers, software group Sage lost 7.75% to 217.25p on talk that Citigroup was placing 46m shares at 220p each.
11am update
Morgan Stanley has done some damage to broadcaster ITV today.
The investment bank's analyst Patrick Wellington has cut his target from 117p to 83p and his rating from equal weight to underweight.
He said ITV has a worse earnings outlook for next year than any of its broadcasting rivals the European broadcasters. "Short-term news on advertising and audience share has been positive." he said. "But the likelihood is that a UK consumer slowdown will put TV advertising under pressure."
He is also sceptical of any bid coming for ITV any time soon. Just last week private equity group Apax denied reports it was planning a move on the broadcaster.
"Although bid speculation may ensue we do not believe Virgin or private equity will renew their bids. We have constantly been sceptical about a bid from Bertelsmann/ RTL," he said.
Also overhanging the share price is BSkyB's 17.9% stake. The Competition Commission is due to rule on the issue in January, and Wellington said he expected partial or full disclosure will be required.
He concluded: "At 83p ITV would still be on a 34% premium to the European broadcasters average price earnings ratio in 2008 but would trade in
line with BSkyB."
Clearly as far as Morgan Stanley is concerned, ITV chairman Michael Grade's honeymoon period is well and truly over. And the shares reacted by falling 2% to 87.3p.
10.08 am
Banks were back in business today after the recent ructions in their share prices.
Barclays - which was last week forced to deny rumours of a £10bn write-off related to dodgy lending - bounced 31.5p to 506p. This is much to the relief of Barclays' executives, especially those who had recently been splashing out their own cash to top up their shareholdings. Maybe they had the right idea after all.
Royal Bank of Scotland, another bank hit by concerns over its exposure to the US sub-prime fallout, rose 5%, while Northern Rock rose 7p to 152p as former Abbey boss Luqman Arnold emerged as another potential saviour. How much shareholders will receive out of any of the various proposals being suggested is, however, a moot point.
Commenting on the Arnold proposal, Landsbanki said: "The team would work alongside the existing Board and management. It would also take a minority stake in Northern Rock but would not make an offer for the company. The attraction for Northern Rock shareholders is that it offers another possible route to recover some value. But it looks like a longer term solution ."
There was a relief rally in Standard Life after it pulled out of the bidding for insurer Resolution, leaving the way clear for rival Pearl. Standard climbed 22.75p to 266.5p. Quite what Standard Life thought it was doing attempting to barge into the bidding, only the mandarins in Edinburgh know. But perhaps the thought that its shares had been dropping ever closer to the company's 230p flotation price brought a dose of reality back to the board.
Miners were also wanted after BHP Billiton promised to hand $30bn back to shareholders if its offer for rival Rio Tinto succeeds. BHP added 4% while Rio rose 5%.
Among the minnows, support services group Carter & Carter has come close to collapse since the unfortunate death of its founder Philip Carter in a helicopter crash earlier this year. It is in talks with its banks and its shares have been suspended at 82.5p, but now there is talk that John Ensall - a member of the Society of Turnaround Professionals (yes, really) - will be appointed as interim chief executive. Kaupthing analysts said this appeared to be a short term rather than permanent solution to the company's problems.
