The financial sector received a welcome boost this morning as shares rallied in reaction to plans by Resolution, the insurer, to consolidate smaller banks and lenders.

As it stands Bradford & Bingley is the only bank linked to the proposed scheme but the move assured much of the sector.

Bradford & Bingley’s shares led the 250, up 6.5p at 72.5p, with larger rival Alliance & Leicester up 0.5p at 295p.

Britain’s biggest mortgage lender, HBOS, gained 0.25p to 270.5p, still below its rights issue price.

Overall the FTSE 100 lost 52.1 points at 5615.1.

Antofagasta, the miner, rose 9.5p to 654.5p after Credit Suisse upgraded the stock, and Thomas Cook was also among the blue chip index’s biggest climbers, up 1p at 235.25p, on giving a positive outlook.

The London Stock Exchange Group was the FTSE’s heaviest faller, down 53p at 816p, after Qatar agreed a deal for rival exchange operator, NYSE Euronext, to build up the kingdom's financial centre and take a 25 per cent stake in the local stock market.

Liberty International extended yesterday’s losses, down 25p at 856p, after Citigroup cut UK real estate targets.

Xstrata was another big faller, down 99p to £41.89, following speculation that the miner is eyeing Australia’s Aquarius Platinum.

In the 250 Punch Taverns lost 30p to 308p on worries about its debt levels and bearish comments from Morgan Stanley on European leisure stocks.

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