Xstrata fell against a rising mining sector amid suggestions that takeover talks with Vale, its Brazilian suitor, had hit a hurdle.

Vale has been negotiating with Glencore, the Swiss metal trader that owns 35 per cent of Xstrata, and there has been speculation that it wants £48 per share. The likely sticking point is Glencore’s lucrative rights to market the miner’s metals - the main source of its income. However, the Brazilian Government and Vale will not want to lose control over their metals exports.

Xstrata was down 10p at £38.90, but rising copper prices and speculation of higher than expected agreements for this year’s iron ore prices buoyed other miners. Antofagasta, the Chilean copper miner, was the blue chips’ second-biggest gainer, closing up 41p at 826p.

The FTSE 100, down in morning trade after a shock writedown from Credit Suisse, recovered in afternoon trade to close up 20.3 points at 5,966.90. It was helped by Wal-Mart, the world’s biggest grocer and owner of the British Asda chain, reporting figures that were better than expected.

Short-sellers closed out of Home Retail Group, the owner of Argos and Homebase, up 10¼p at 272p, and Kingfisher, the B&Q retailer, up 5.1p at 136.7p, ahead of results next week. Investec cut its target price on Kingfisher to 115p, however, giving warning that the value of its properties had fallen and that the dividend could be halved.

A block of 44 million shares changed hands in J Sainsbury, off 1p to 381½p at Monday’s closing auction, and yesterday a 20 million block was traded in Mitchells & Butlers, up 4p at 449p, sparking speculation that Robert Tchenguiz was swapping shares in both for contracts for difference. Sources said that his financial interest in both was unchanged.

Barclays, up 17p at 477p, cheered the banking sector by meeting forecasts for a big dividend rise. Mike Lenhoff, Brewin Dolphin’s strategist, said: “If Barclays results are indicative, then this could be something of a watershed . . . 6,000 and beyond on the FTSE, here we come.”

Even Royal Bank of Scotland, which initially fell amid vague rumours of foreign exchange problems, closed the day up 5¾p at 366¾p. Alliance & Leicester fell another 17½p, to a seven-year low of 528p ahead of results today, after down-grades in its debt rating from credit rating agencies. S&P gave warning of further writedowns.

The London Stock Exchange fell 107p to £15.64 as prospects for a bid battle between its shareholders Qatar and Dubai faded after The Times’s report that they had reached a deal.

Vodafone slipped 3.9p to 169.9p after Goldman Sachs trimmed its forecasts. Its Verizon Wireless subsidiary in America is embroiled in an expensive spectrum auction.

Strong results from Morgan Crucible, up 16½p to 213p, helped to raise its fellow mid-cap ceramics engineer Cookson, up 33p to 579p. Both are seen as tempting bid targets.

New York: Wall Street gave up a big early advance, that was fuelled by relief over Wal-Mart sales figures, and ended mixed as oil prices closed above $100 for the first time and stoked fear that inflation would stymie an already troubled American economy. The Dow Jones industrial average closed down 11.00 points at 12,337.20.

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