Investors will be seeking stability on the London stock market in the coming days after one of the most volatile trading weeks in recent times. The FTSE 100 index closed Friday at 5,311.30 points, a loss of 1.94 percent or 105.4 points from a week earlier.
However, the index shot up by a historic 8.84 percent on Friday, driven by massive gains in banks after the US government announced a plan to cordon off the debt and toxic investments at the heart of the global credit crunch. The FTSE had tumbled under 5,000 points to its lowest level in more than three years on Tuesday.
"After the roller-coaster ride of the past two weeks, now is a good time to take stock," said Julian Jessop, chief international economist at Capital Economics in London. "The authorities appear to be succeeding in averting the worst case scenario of a complete financial meltdown.
"Nonetheless, the fact that they have had to intervene so dramatically - and they may still have more work do - also underlines how bad market conditions have become."
Share prices in British banks recovered massively on Friday having plunged earlier in the week following the collapse of US investment banking giant Lehman Brothers.
They were pushed lower also by the sales of Lehman's peer Merrill Lynch, the rescue of US insurance giant AIG and the take-over of British bank HBOS. The share price in HBOS soared 28.91 percent on Friday to 222.50 pence after the beleaguered bank was bought by British rival Lloyds TSB for 12.2 billion pounds (15.4 billion euros, 21.8 billion dollars).
The value of shares in HBOS - created by the merger of Bank of Scotland and Halifax in 2001 - had slumped by a total of 55 percent during the first three days of the week. HBOS is Britain's biggest lender of home loans but faced possible collapse owing to massive write-downs caused by the US subprime housing crisis and resulting credit crunch.
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