Banking stock advances lift Footsie back into the black

Banking giant Barclays secured its place at the top of the Footsie risers' board ahead of annual figures today that are expected to show full-year profits of more than 11bn.

BA followed with a 3 per cent rise after investors welcomed initial US approval for a planned tie-up with American Airlines, with the wider market closing up 25.02 points at 5167.47.

The market has steadied as fears over debt-laden Greece subside, although the euro continued to come under pressure, down against the pound, at 1.15 euros. The pound eased to 1.57 US dollars.

But Greece faced down pressure from euro zone peers to step up budget cuts and stem a looming crisis in its debt markets yesterday, as Brussels again questioned its past reporting of public finances.

Greece is the first country in the euro's 11-year history to require an emergency statement of political support from other European countries as it struggles to weather pressure from financial markets worried about its massive debt.

But Finance Minister George Papaconstantinou warned against asking the government, which faces growing public dissent over budget cuts, to do too much too fast.

With US markets shut for the Presidents' Day holiday, there was no direction provided from Wall Street.

But engineering support services group Babcock International offered some takeover excitement in the second tier, when it revealed an approach worth around 1.14bn for rival VT Group – although it said this had been rejected.

VT's shares soared 15 per cent as a result, despite news it had rebuffed talks and deemed the approach as "strategically unsound".

VT – up 76p tot 584p – said Babcock's proposed offer was "totally unacceptable" and would give it unwelcome exposure to the marine defence sector, which it had exited last year.

Babcock's shares suffered opposite fortunes, down 9 per cent, or 49p to 505p, as investors digested the news and potential for a pricey bid battle. Meanwhile, Babcock's takeover approach also hit shares of Mouchel as it cast uncertainty over VT's aims to buy the group.

Mouchel plunged 293/4p to 2201/4p in a sharp reversal of gains seen earlier in the day when it was revealed that VT had increased its takeover proposal to 294p a share, equivalent to 330m.

Back in the FTSE 100, BA's shares lifted 51/8p to 2005/8p after US regulators said the firm would only have to sacrifice four transatlantic take-off and landing slots at Heathrow to secure its closer ties with alliance partners.

Barclays was up 13p to 2755p and many other stocks in the sector were also doing well after Citigroup analysts said UK banks looked undervalued compared to their European peers.

HSBC added 71/4p to 657p and Royal Bank of Scotland was 3/8p better off at 315/8p.

Miners made progress after metal prices ticked higher, helped by a surprise fall in copper stocks. Rio Tinto led the sector gains, up 69p to 3275p.

Burberry also crept onto the risers board, adding 71/2p to 6091/2p after brokers at UBS said prospects for the luxury goods sector looked brighter during the second half of 2010.

BT however continued to suffer after its results last week threw a further spotlight on its pension woes.

Shares were down 31/8p to 1193/8p, making it the top flight's biggest casualty.

The biggest Footsie risers were Barclays, British Airways, Legal & General lifted 13/4p to 711/2p and Carnival advanced 48p to 2276p.