Big oil players helped keep FTSE losses to a minimum as they tracked world oil prices which remained near record highs, driven by supply fears and a weak dollar.

New York’s main oil futures contract, light sweet crude for August delivery, dropped back marginally to 145.26 dollars a barrel from Thursday's record close of $145.29 at the New York Mercantile Exchange.

Royal Dutch Shell added 20p at 1,973p BP gained 4.25 at 561.25, and Tullow Oil added 5p to reach 910p.

By midday the FTSE 100 came off its morning low to sit 40.1 points weaker at 5,436.5 as a mining and oil stock slide continued.

Financials remained resolutely downbeat during the morning with Wall Street staying closed and Bradford and Bingley rights issue news taking a toll.

An increase of B&B's rights issue to £400 million from £258 million after US private equity firm TPG Capital's withdrawl from their plans to buy a 23 per cent stake added to the pressure on the financial sector.

FTSE 250 member B&B dropped 9 per cent, or 5.5 pence to 55.5p, while Barclays lost 8.75p at 283.25, HSBC fell 10p at 760p, HBOS was down 3.5 at 275.75 and Royal Bank of Scotland was 3.75p weaker at 209.25p.

In the retail sector, Waitrose piled on the agony for M&S by revealing strong growth, indicating that it has been taking market share from its publicy quoted rival.

Other retailers recovered some losses as investors bought back in after drops following M&S's figures.

J Sainsbury was on the slide again until 9.30 when it revealed that the Qataris had upped their stake to 26 per cent. It then added 1.25 per cent to 238.5p.

Friends Provident fell 3.6 per cent to 97.9p on reports that the only trade buyer for its Lombard division, Swiss Life had pulled out leaving only private equity bidders. Panmure Gordon said FP was still undervalued even if a bid was lower than the £700 million expected.

Sports Direct International edged down another 0.25p to 68.75p ahead of results next week. Panmure Gordon's Philip Dorgan downgraded his profit forecasts since he said forecasts of sales growth in the current market looked optimistic.

BSS Group, the builder's merchant, fell 8 per cent to 255.75p after Citigroup cut from hold to sell, saying that its 100 per cent UK exposure means it will suffer from the construction slowdown.

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