Market Report: Barclays slips as credit fears spook nervy market

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The Independent Online

Hysteria continues to swirl around the UK banking sector. Barclays fell almost 5 per cent after a rumour swept the market that it was to go cap in hand to the Bank of England to use its overnight facility for the third time. Late in the day, however, observers pointed out that the move was unlikely after the bank's recent statement that it was "awash with liquidity".

While it managed a brief rally in the afternoon, Barclays still shed 2.92 per cent to close at 598p. Today marks the central bank's first auction of three-month funding, announced last week, so expect the rumours around the sector to intensify throughout the day.

One financial stock to buck the trend was Man Group. The hedge fund manager was heavily hit by the recent market turmoil and its value dropped 27 per cent in just over a month. It rose to the top of the leaderboard for much of yesterday after a solid trading update, which revealed a rise of 15 per cent in net management fee income in the six months to the end of September. It closed up 2.2 per cent at 534.5p

The building supplies group Wolseley also rallied, recouping some of the losses after it was smashed by the release of its full-year results on Monday. The stock rose 1.05 per cent to 816p following support from Credit Suisse, which upgraded the stock to "neutral". The Swiss broker said that, after the 12 per cent fall since mid-September, "the current discount versus the broad European peer group screens favourably".

Collins Stewart threw its five cents-worth into the debate surrounding bidders for Friends Provident. The shares were up 0.23 per cent to 176p after it backed a potential battle between Old Mutual and Zurich Financial for the insurer, as the possibility of Friends' tie-up with Resolution recedes. This follows last week's rumours of a 210p-per share bid from Zurich. However, Friends weakened to finish 1.7p down at 173.9p.

The FTSE 100 opened lower yesterday, after jitters on Wall Street overnight. It sunk by 98 points, but staged a small rally to close 69 points lower at 6,396.9. London was pulled down by profit-taking in the miners, with Antofagasta, Monday's best performer, giving up nearly all of its gains to end 6.35 per cent lower at 789.5p.

BP was caught in a slick after reports its new chief executive Tony Hayward told staff the third-quarter results would be "dreadful", which sent the stock down 2.88 per cent to 572.5p. This comes as the oil major announced it was to restructure, and will update the market further next month.

On the second string, the Bluetooth technology group CSR tumbled 6.13 per cent to 582p. The fall was sparked by rumours surrounding news its chief executive was to leave after barely 19 months in the job. John Scarisbrick will be replaced by Joep van Beurden, the chief executive of NexWave, on 1 November. Sources close to the company said everything was fine in the business.

Also in need of repairs was Helphire Group after it posted in-line full-year results. Helphire, founded in 1992 to help motorists involved in accidents where they aren't to blame, fell 5.88 per cent despite posting a 63 per cent jump in pre-tax profits for the full year. Landesbanki said recent underperformance in the stock was due to rumours of a private equity bid drying up.

The mid tier's best performer was Welstream Holdings. The pipeline manufacturer released a trading update which said full-year results would be "significantly ahead of expectations". The stock soared more than 10 per cent to 770p on the news, which was driven by the better-than-expected progress of its new Brazil facility.

The growth market was hit by several disappointing trading updates. The worst performer was the wreck salvage group Subsea Resources, after its full- year losses widened from £3.8m to £17.9m. It shed over half its value to close at 1.125p per share. While trading was in line at Vanco, the corporate telecoms provider, problems with three contracts caused the stock to give up a fifth of its value, closing at 169.5p. Vanco has suffered a torrid year, slumping 68 per cent since its year peak of 505p in April.

Black Rock was down after it placed 11 million shares at 18p in a bid to raise £2m. The move, to help fund the drilling of an appraisal well in Colombia, sent the shares down 12.5 per cent to 21p. One trader said: "It looks like there were good reasons for it. There probably will be some good news and I expect the shares to rally."

Top of the risers was Bristol & London, which provides replacement vehicles to owners of prestige cars. The group, 88 per cent owned by the chief executive, has slumped in the past 18 months from 100p to 8.5p last week. It rallied to close 67.65 per cent higher at 14.25p. Elsewhere, Christian Salvesen admitted it had received two approaches for the company. The logistics business closed up 26.21 per cent at 65p.