The surging price of iron ore put some steel into the London market yesterday as media, transport and food stocks appeared to collapse under a welter of fears over dilutive share issues.

Eurasian Natural Resources, the Kazakhstani miner with key assets in iron ore and ferrochrome used in making stainless steel, surged 99p to £14.79 as it unveiled substantial growth in first-quarter revenues, driven by the soaring price of these commodities. Credit Suisse set a price target of £16 and Deutsche Bank £15.50 as both praised it for walking away from a bid for Kazakhmys, its rival, up 74p at £18.09.

BHP Billiton rose 98p to £21.18, yet another high, amid talk that a Chinese group such as Chinalco was stake-building in an attempt to have some say in the potential takeover of Rio Tinto. Marius Kloppers, BHP’s chief executive, said recently that he was certain the Chinese would end up owning a stake in BHP, just as they had bought into Rio. Rio itself was up 236p at £68.81, still buoyed by talk that BHP would have to raise its bid.

A huge slide in the value of banks, as Bradford & Bingley did an about-face and said that it would need a rights issue at a 48 per cent discount, was countered again by the mining sector and the FTSE 100 managed to end up 4.1 points at 6,216.0.

B&B fell 14¾p to 144p but Royal Bank of Scotland was the biggest financial victim, down 18½p to 319¼p as it won approval for its hugely dilutive rights issue and for a payment of the dividend in new shares. Alliance & Leicester (A&L) slipped 13p to 445¾p after Dresdner Kleinwort raised the prospect that A&L would also pay its interim dividend in shares. HBOS closed down 14¾p at 470¼p.

British Airways fell 10½p to 218p as Iberia, its Spanish rival, in which it holds a stake, reported a grim set of figures, beset by the soaring fuel price. There is mounting talk that Lufthansa, the German airline, will use its relatively well-priced shares to consolidate Europe’s struggling airline industry. A merger with BA along the lines of the Air France-KLM deal is a possibility, as well as a bid for bmi and Virgin Atlantic.

A string of highly indebted companies plunged amid fears of rescue equity issues after both FirstGroup, down 37½p to 561½p, and Johnston Press, down 20½p to 115¼p, announced dilutive fundraisings. Dairy Crest fell 36p to 425p. Yell, thought to be close to breaching covenants, lost 14½p to 188p, DSG International fell 5¼p to 69¼p and the cash-strapped Trinity Mirror fell 13¾p to 249p. Travis Perkins fell 52½p to 939p.

Capital & Regional, up 6½p to 331¼p, bucked the falling property market before a trading statement today amid hopes that it might be close to a sale of some its Mall fund properties. Another stock shorted on debt worries, Barratt Developments, fell 8¾p to 248½p after Mark Clare, the chief executive, avoided a rights issue in favour of rolling over some of the debt at a higher cost. “They’re prolonging the pain,” one trader said.

New York: Stocks made gains after fairly benign inflation data and better-than-expected earnings reports from Macy’s and Freddie Mac. The Dow Jones industrial average closed up 66.20 points at 12,898.40.

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