Talk that Kaupthing, the Icelandic bank, was liquidating positions in London shares after raising margin calls on clients left the brewers Marston’s and Greene King down heavily against a rising market.

Marston’s fell 16 per cent, or 25p, to 133p and Greene King closed down 11 per cent, or 49½p, to 419½p amid talk that Kaupthing was trying to sell about two million shares in each.

Kaupthing, which owns Singer & Friedlander, the British merchant bank, offers bets in stocks known as contracts for difference for big individual clients, such as Robert Tchenguiz, who holds a sizeable stake in Mitchells & Butlers. In an attempt to cut its risk, it confirmed that it had asked clients for more cash to cover many of these positions. The stock would have to be sold if those clients could not pay the extra costs. M&B underwent nearly twice its usual volume in trade as it fell 13¾p to 210¼p.

The cost of insuring five-year bonds in Kaupthing nearly doubled yesterday from Thursday’s prices, indicating that traders in its debt believe that there is a strong chance of default. Traders offering to insure investors in Icelandic national debt from default also demanded cash up front; a similar move was taken by insurers of Lehman’s debt before its bankruptcy. After Glitnir, the Icelandic bank, was nationalised in a rescue bailout by the Government on Monday, Kaupthing said that it would need not similar support and that it was well financed and very liquid.

Reckitt Benckiser, the Anglo-Dutch household and health products group, fell 73p to £26.99 amid fears that the expiry of patents next October on Suboxone, an alternative to methodone for addicts trying to get off heroin, could wipe 10 per cent off its earnings in 2010 and leave overall earnings flat that year. The drug contributed 10 per cent of group earnings last year. Andrew Wood, an Alliance Bernstein analyst, said: “We believe that not all investors understand the scale of the financial impact,” he said.

The FTSE 100 rose 109.91 points to 4980.25 as traders in London and Wall Street anticipated the American bailout package being passed. HBOS was the top performer, up 30.4p to 200½p, narrowing its discount to Lloyds TSB’s offer. Lloyds rose 28¼p to 290¼p, helped by the raising of the Government’s guarantee thresholds.

British Airways fell 12.7p to 165.4p after announcing a near9 per cent slump in business-class passengers last month. InterContinental Hotels rose 12½p to 654½p despite Marriott’s warning in America that the credit crunch was likely to delay planned new hotel openings. Landsbanki fears that InterContinental will cut its new site opening plans at its trading statement next month. Yell Group rose another 10p to 100p as Morgan Stanley said that it expected a deal on its debt within the next two weeks.

Thomson Reuters rose 15p to £12.49, having fallen on Thursday after an investor meeting. Goldman Sachs has the company on a “neutral” rating and has not downgraded to “conviction sell”, as we stated yesterday.

— New York: Wall Street ended its worst week in seven years with another tumble amid fears that the $700 billion financial sector rescue plan will not unlock credit markets or stave off a recession in the United States. At the close the Dow Jones industrial average was down 157.50 points at 10,325.40.

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