Solvency fears weighed on Aviva for a fourth day running as an analyst said that even a dividend cut of 50 per cent would not be enough to repair its solvency levels and that disposals should be considered.

The Norwich Union insurer fell by a further 12p to 291p, making a 14 per cent fall so far this week since analysts, following briefings by the company, began predicting that it would cut its dividend.

Standard & Poor’s, whose core business is analysing debt, downgraded its rating on Aviva’s shares from “hold” to “sell”, saying that a halving of its dividend would not be enough to prop up its solvency position. Tony Silverman, an analyst, said that Aviva would need to sell assets such as its Canadian and French non-life businesses in order to offset falling values of commercial property and corporate bonds, property loan defaults and tighter implementation of solvency rules by the Financial Services Authority.

Legal & General rebounded from Wednesday’s falls, rising 1.51p to 51.29p. However, Prudential, also dogged by fears that its accounting techniques flattered its solvency position, after a negative note from Cazenove, fell 7p to 363p.

The FTSE 100 closed up 18.43 points at 4,158.66 as stronger than expected figures from US-listed Alcoa, the first miner to report this season, helped to drive a rally in mining stocks. Encouragingly for the bulls, trading volumes were far stronger than in the past three days.

Citigroup played its part, upgrading several silver and platinum miners, including Fresnillo, the Mexican miner controlled by Alberto Bailleres, Mexico’s second-richest man. Citigroup said that both silver and gold should both rebound once a short-lived recovery in the dollar ended and the currency returned to “protracted weakness”. It said that silver, having fallen farther than gold, should recover faster.

Citigroup also upgraded Hochschild, the silver miner, from “sell” to “hold”, and the shares rose 27½p to 301½p. Peter Hambro Mining, the Russian gold explorer, rose 30p to 559p after the broker upgraded it to “buy”.

However, Randgold Resources fell 32p to £36.35 as Citigroup said that it had risen too high. Anglo American rose 87½p to £16.53 as shareholders were reported to be demanding a premium to a nil-premium offer from Xstrata, up 22.7p at 609.8p.

Cairn Energy, about to pump oil from its field in Rajasthan, India, fell 39p to £20.98 after the state government proposed a new tax on oilfields.Cairn’s shares were already under pressure after the national government on Monday raised tax on oil production from 10 to 15 per cent and after the company told analysts that production would be slower to ramp up this year than many had expected.

Morgan Stanley and Credit Suisse cut this year’s earnings estimates for Cairn yesterday after meeting the company. However, both retained “buy” advice, with Credit Suisse noting that the ramp-up mattered less than the long-term production.

Phil Corbett, an analyst for RBS, Cairn’s broker, said that the Rajasthan state tax should have no effect on Cairn since its licence precluded any liability to such a tax.

• New York: Investors favoured banking stocks as the Dow Jones industrial average edged higher and closed up by 4.76 points at 8,183.17.

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