Shares in Taylor Wimpey rose more than 7 per cent yesterday as dealers speculated that the embattled house builder might resolve its financing issues within the coming weeks.

The speculation arose after a leaked e-mail from Pete Redfern, the group’s chief executive, circled the city.

In it, he told staff that the company has had “very productive negotiations” with its banks about its debt over a two-week period, increasing his confidence of reaching an acceptable solution for the company. Mr Redfern added that the talks over its £1.9 billion of debt will go on until about the end of February and that risks have been reduced.

The group’s shares, which have been hammered over the past year amid the housing slowdown – and will exit the FTSE 250 on December 22 as part of the latest reshuffle – rose 0.7p to 10.5p.

Barratt Developments, its rival, also made ground, up 4¼p to 66½p, after it said its Wilson Bowden Developments arm was to sell industrial land and buildings for £46 million, which it would use to pay debt. Elsewhere in the sector, Bellway gained 19p to 590½p and Persimmon rose 5½p to 245p.

Overall, the FTSE 100 edged up 15.11 points to 4,324.19, with a positive reaction to the American interest rate cut cancelled out by grim economic data.

Financials weighed heavily on the index amid concerns about the economy. HSBC was the biggest faller, down 43p to 672p, on continuing fears that the group might hold a rights issue. HBOS lost 4.1p to 67.8p and Royal Bank of Scotland fell 2½p to 50½p, with Standard & Poor’s saying the UK’s banking industry risk had risen due to deteriorating credit conditions and the high level of indebtedness in the country.

Miners kept the index from sinking lower, with Fresnillo leading the pack, up 13.4p to 181.5p. Lonmin gained 46p to 728½p and BHP Billiton rose 65p to £12.98 on firmer metal prices.

Two of the FTSE 250’s safer bets rose after reassuring investors with upbeat trading updates. Serco, the operator of the Docklands Light Railway, which will join the FTSE 100 this month, gained 6¾p to 430¾p, and Intertek, the safety testing group, added 36p to 762p.

Rentokil Initial, the parcels to pest control group, rose 1½p to 40p after Merrill Lynch said that the shares have the potential to more than double after a positive meeting with management. Goldman Sachs also upgraded the group to “neutral” from “sell”, saying that the market was pricing in too much bad news.

F&C Asset Management lost 2p to 79p despite a pledge by the fund manager to cut annual operating costs by £15 million, or 10 per cent. The cuts, on top of £12 million in savings identified in August, mean that up to 100 jobs will be lost.

But traders fretted about perilous market conditions for fund managers as Alain Grisay, the chief executive, forecast a serious recession that would see investment business slow and management fees fall.

New York: Stocks retreated from a monthly high as euphoria over the Federal Reserve’s interest rate cut to virtually zero faded in the wake of Morgan Stanley’s results. The Dow Jones industrial average closed down 99.80 points at 8,824.34.

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