Weaker bank stocks outweigh gains in Autonomy as Footsie falls further

FTSE: 5,040.76 (–51.47) Mid-250: 9,759.06 (–101.16) Small Cap: 2,916.10 (–25.05):UK STOCKS mounted a late rally yesterday afternoon, even climbing into positive territory at one point before closing well off their session lows.

The FTSE 100, which had fallen back below 5,000 earlier in the session, rallied to end the session 1 per cent lower at 5,040.76, having been more than 3 per cent lower at its worst.

“The FTSE is likely to head lower to test 4,916 which may spike down to 4,861,” said Sandy Jadeja chief technical analyst at City Index.

“If the index tests and closes below these levels then the likelihood of aiming for 4,470 may become a reality sooner rather than later. The index really needs to stay above 4,781 to head back towards the 5,445 to 5,600 area as the key resistance levels,” he said.

Jordan Lambert, trader at Spreadex, said: “Further weak manufacturing data from the US and surprisingly poor German GDP this week increase the likelihood of a double-dip recession and recent evidence indicates there are also inflationary pressures in these weakening economies.

“This is a double blow to consumers as they now have price rises to deal with along with job insecurity which all leads to less disposable income,” Mr Lambert added.

Software producer Autonomy provided the stand-out gain yesterday after US group Hewlett-Packard made a cash offer for the FTSE 100 company.

The Hewlett-Packard bid, announced after the close of the previous session, sent Autonomy’s stock up 71.6 per cent to £24.55, below the offer price of £25.50.

It lifted sentiment toward technology stocks, leading to wider gains in the sector, where there were reports of further deal activity. Reuters said that Sage, an accountancy software provider, abandoned plans to bid for its Australian peer MYOB due to the need for securing shareholder approval after the recent slide in its own share price. The stock rose 1.8 per cent to 235.8p.

Arm Holdings, a chip designer, was 2.4 per cent higher at 490p.

Banks remained lower, however, as stocks most exposed to fallout from the growing sense of crisis made some of the biggest falls. Lloyds Banking lost 4.8 per cent at 28.4p. Barclays was 2.3 per cent weaker at 150.6p. Royal Bank of Scotland was 5.4 per cent softer at 20.8p. – (Copyright The Financial Times Limited 2011)