Market clings on to gains

Shares today steadied after a nine-day losing streak that had pushed the FTSE-100 to a seven-year low.

The banking and insurance sectors provided the main impetus behind the morning's gains. Prudential rose 2.8% and Lloyds TSB was up 3.6% after Goldman Sachs raised its rating on the bank. But the index hovered just above yesterday's seven-year low. In lunchtime trading, the index was up 11.7 points, or 0.3%, at 3,633.9. Once again traders fretted about the prospect of war against Iraq.

"I can see us getting about 25 points up, but I feel that not too many people are going to want to go charging into the market ahead of the weekend without any more idea of how the land lies in Iraq," one trader told Reuters.

The market has dropped 9% since January 10, with traders increasingly worried about the intensifying drumbeat of war coming from Washington. Some support for European markets came from slight gains overnight on Wall Street, where the Dow Jones index of leading US shares rose 0.6%, or 50.7 points, to 8,369.4.

Rebounding technology stocks and news that North and South Korea had agreed to negotiate in the dispute over the north's nuclear programme helped lift Wall Street.

In morning trading in London, BAE Systems, the defence group, slid 3.3% to 110p after the investment bank Schroder Salomon Smith Barney cut its rating on the stock to "underperform" from "in-line" and trimmed its target to 95p from 100p.

Legal & General, the financial services group, rose 3.2% after the company announced that 2002 global sales rose 13%, broadly in line with expectations. The markets should get some pointers next week when Northern Rock, the mortgage bank, kicks off the annual results season for UK banks. The boom in the housing market should mean higher profits for Northern.