Retail investors continued to pile into Northern Rock shares today, hoping to make a quick profit from the beleaguered lender.

Redmayne-Bentley, the stockbroker, said it had seen a sevenfold increase in the opening of new accounts in recent days – the vast majority created for short-term punts on Northern Rock and fellow lender Alliance & Leicester.

The Share Centre, the execution-only broker, said that 40 per cent of recent trades were in Northern Rock shares. New account openings were up nealy 500 per cent in the first two days of this week, compared with the total recorded for the whole of last week.

Georgina Mitchell, of Redmayne-Bentley, said: “We have seen an awful lot of new business … There seems to be a belief that the share price is about to rocket after the Government assured the safety of accounts at Northern Rock – although that doesn’t mean the company will survive.”

Hoodless Brennan, the stockbroker, said that about 45 per cent of trades by its clients so far today were in Northern Rock shares. Of those, 65 per cent were buy orders.

On Monday and Tuesday, Hoodless Brennan saw its overall trading rate 40 per cent to 50 per cent higher than average, with about 50 per cent of trades involving Northern Rock shares.

David Buik, a partner at BGC Partners, the inter-dealer broker, said that spread betting and trading in contracts for difference around Northern Rock had been “frenetic”, with a rash of punters taking small bets on the stock’s next move.

“Lots of the trading – especially the treatment of Alliance & Leicester – has been insane. But a few people I know have made a lot of money,” he said.

Alliance & Leicester's shares have lost – and made back – about a third of their value in the course of the week.

Many investors will be left nursing losses, however, as shares in Northern Rock fell heavily again today, reversing earlier gains after major shareholders Lloyds TSB and Baillie Gifford cut their holdings and on reports that HBOS and Lloyds do not intend to bid for the crisis-hit bank.

Northern Rock shares tumbled 8.82 per cent to 279p in late morning deals after earlier touching as low as 246¼p.

But it appears that Northern Rock’s precipitous decline has only sparked an impulse to take a punt for many retail investors.

“The atmosphere almost feels like a privatisation issue,” Mark Rayden of Hoodless Brennan said. “We’re seeing the sort of excitement you’d usually associate with an IPO – something a bit sexy.”

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