BT shares rallied yesterday after it made progress in tackling its pension scheme deficit, but fears about the global recovery con-tinued to weigh on London's leading shares index.

The telecoms giant rose 5%, or 11.9p, to 232.1p after it reported a sharp reduction in its pension deficit to £4.1 billion and pledged to eliminate the shortfall in 10 years.

However, the wider FTSE-100 index made only marginal gains, rising 9.2 points to 5854.9. It fell nearly 2% over the week after sentiment was hit by worrying data from China and the eurozone.

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A report showing that US house sales declined for the second month in a row cast doubt over the world's biggest economy. The Dow Jones Industrial Average, which has also been on the back foot this week, was slightly up as the London market closed, as were the Dax in Germany and the Cac-40 in France.

The pound was down at €1.20 against the single currency which rebounded from recent lows. But it was up at $1.59 against a weakened dollar.

Banks came under pressure after the Bank of England's Financial Policy Committee said they had failed to build up adequate cash buffers to help them survive another financial crisis. However, the sector largely recovered its earlier falls. Royal Bank of Scotland was down 0.1p at 28p, while HSBC was off 5.1p at 558.3p.

But Standard Chartered and Barclays reversed earlier declines to close up 2p at 1599p and 4.9p higher at 244.5p respectively.

Heavily-weighted miners also pulled back their earlier losses following a poor week for the sector. Antofagasta was up 31p at 1172p and Kazakhmys rose 22.5p at 935.5p.

However, Randgold Resources was among the biggest fallers in the Footsie, following yesterday's 13% slump, with a fall of 115p to 5650p, after a coup in Mali where the gold miner has two big facilities.

Citigroup heaped more misery on the stock when it downgraded it to neutral from buy.

Meanwhile, drinks giant Diageo saw its shares fall 13.5p to 1510p after it said the Government's plan to bring in a minimum price for alcohol was misguided.

Pub companies failed to gain a lift from the proposals despite expectations that they would erode the price difference with supermarkets. Greene King was down 1.5p at 517p and JD Wetherspoon slipped 0.8p to 420p.

The biggest Footsie fallers included Burberry down 31p at 1513p, and Wolseley which gave up 40p at 2464p.