Admiral bucked the market trend last night, gaining 2.3 per cent or 20p to 875p as investors bought in ahead of the insurer's full-year results.
The stock was one of only four blue-chips to close in the black as the FTSE 100 struck new lows. The move up follows a recent call from Numis Securities, which at the end of last week said that, following recent weakness, Admiral's valuation was becoming attractive.
"We think concerns regarding ancillary revenues are a distraction and suggest that growth in the core insurance business could exceed expectations," the broker said, reiterating its "add" recommendation ahead of today's results.
Overall, the FTSE 100 slumped to its lowest level since early 2003, losing 204.26 points to 3,625.83 after a series of grim economic indicators for China, Japan, Europe and the United States, and a mammoth £12.5bn rights issue from HSBC, sparked a market-wide sell-off.
On the other side of the Atlantic, the Dow Jones Industrial Average fell below the 7, 000 point mark in early trading as the factors weighing on London were supplemented by renewed concern for AIG, the insurance giant, which is in line for another state-backed bailout.
David Jones, the chief market strategist at IG Index, said recent moves in world markets were "reminiscent of the almost panic-selling we saw back in October last year".
"The fact that markets have broken below those lows leaves the rally at the end of last year as just another dead-cat bounce," he said. "In the last major bear market, which ended in 2003, the FTSE 100 traded down to the 3,300 area before starting the long climb up. That's the next level traders are eyeing now, but the nagging doubt for many is that the economy today is in a much worse shape than back in 2003."
On the FTSE 100, although analysts were generally positive on HSBC, traders said the lender's cash call had reignited fears about the need for capital elsewhere in the sector, sending Lloyds Banking Group – the target price for which was cut to 42p from 72p at Nomura – down by 15.2 per cent or 8.9p to 49.4p.
Royal Bank of Scotland proved more resilient that its peers, losing only 0.6p to 22.6p, with traders attributing the move to its success in negotiating favourable terms for access to the Government's asset protection scheme.
The mining sector also proved a drag on the market, as fears of a sudden, sharp dip in the demand for commodities resurfaced.
Xstrata, which won shareholder approval for its rights issue, was the weakest here, losing 13.5 per cent or 94p to 601.5p. Anglo American was down 8.6 per cent or 87p at 914p while Eurasian Natural Resources Corporation lost 6.6 per cent or 22.2p to 311p.
The pharma group AstraZeneca was broadly unchanged, easing by 3p to 2,240p, as the market lost its appetite for risk.
The sector suffered some sharp selling after the US President, Barack Obama, unveiled budget proposals targeting high drug prices, and Goldman Sachs called the end of the "strong balance sheet trade" last week.
But the trend showed signs of reversing last night, with Merrill Lynch pointing out that last week's sell-off had left pharma stocks back at their "2003-lows".
"Even the UK stocks with big patent cliffs, [like AstraZeneca], that usually trade at large premiums to net present value are now at or below fair value," the broker said. "The continued sell-off on Friday surprised us since the Obama budget was, if anything, more benign than expected."
Elsewhere, the FTSE 250 lost 188.69 points to 5,860.4.
Ashtead was among the strongest of the mid-caps, gaining 3.6 per cent or 1.2p to 35.5p after Singer Capital Markets weighed in with a "buy" note ahead of the equipment hire group's third-quarter results, which are due this morning.
The Lloyd's of London insurer Beazley was 2.8 per cent or 3p ahead at 107.5p after UBS switched its stance on the stock to "buy" from "neutral".
The admission from Segro – 24 per cent or 25.7p behind at 81.5p – that it was mulling a possible rights issue sent investors fleeing from real estate investment trusts.
Brixton was the hardest hit in the sector sell-off, losing 26.4 per cent or 10.2p to 28.5p, while its FTSE 100-listed rival British Land lost 12.6 per cent or 57.7p to 400p.
ITV lost 7 per cent or 1.7p to 23p after Royal Bank of Scotland reduced its target price for the broadcaster's stock to 21p from 26p.
Among smaller companies, Blue Oar soared 138 per cent or 4.5p to 7.7p after it emerged that the investment group Evolve Capital had agreed to sell its 65 per cent stake in the business to WH Ireland, which will merge with Blue Oar to form the largest stock broker on the Alternative Investment Market. Evolve climbed 25.1 per cent or 1.1p to 5.6p.
After the deal, Evolve will end up as the single largest shareholder in WH Ireland, owning about 31.8 per cent of the enlarged group. WH Ireland was flat at 72.5p.Reuse content