FTSE:5,089.37 (+22.56) Mid-250:9,839.24 (+23.74) Small Cap:2,785.84 (–9.95)

LONDON EQUITIES were volatile yesterday, as doubts remained about the outlook for growth in the context of the uncertain response of political leaders to a potential sovereign debt default by Greece.

There were gains for UK banking stocks after upbeat comment on the sector from UBS. In a note to clients, Alistair Ryan and John-Paul Crutchley said British and Nordic banks were “banks, seeing funding inflows” and remained “bystanders in any but the most extreme euro zone scenarios”.

They called Lloyds Banking a “core buy”. Its stock rose 3.2 per cent to 35.21p.

Hopes that the annual meeting of the International Monetary Fund could produce a plan for co-ordinated intervention from central banks to limit contagion from what looks like the inevitable failure of Athens to meet its financial obligations remained uncertain. But banking stocks were encouraged by signs that the group had conceded ground about the necessary size of measures required to limit the fallout.

Lee Mc Derby, head of dealing for Investec’s Corporate Treasury, said reports of the leaders discussing measures worth €3,000 billion was a positive sign for traders: “Although nothing is concrete at the moment a package of this size would, if enacted, cause some respite for the markets. Authorities could move closer to a solution over the next few weeks, bearing in mind the Cannes G20 Summit takes place in November.”

But the rundown of the list of losing shares once more reflected growing concern that the turbulence faced by the euro zone and the wider financial system from any default could have serious implications for faltering global growth.

Mining stocks dominated the downside. Among base metals producers, Antofagasta fell 2.2 per cent to 950p, Kazakhmys was 3.9 per cent weaker a 782p.

Precious metals producers were at the forefront of the losses, after the recent strong demand for gold and silver left them looking overvalued. Silver miner Fresnillo was the biggest single faller as spot silver prices fell by as much as 13 per cent. The stock lost 6.7 per cent to £15.24.

Gold miner Randgold Resources was 2.8 per cent softer at £61.67 and platinum smelter Johnson Matthey was 1.9 per cent weaker at £15.31. –(Copyright The Financial Times Limited 2011)