FTSE rises after early drop

Leading UK shares were up slightly after coming under early pressure, when Barclays reported a big increase in bad debts and a drop in first half profits.

The FTSE 100 was up 21.7 points, or 0.5% at 4267.9. The index turned higher after Britain's fourth largest bank unnerved the markets at the opening.

Barclays reported a 6% fall in pre-tax profits to £1.7bn in the six months to June 30, down from £1.8bn a year earlier. Analysts had forecast profits between £1.6bn and £1.9bn.

Bad debts rose 43% from the previous year to £713m, largely due to the economic woes in crisis-hit Argentina. Barclays shares dropped 22p, or 4.5%, to 467p. Lloyds TSB and HBOS fell more than 2% as banks took about 25 points off the main index.

"The trend looks pretty bad, a 43% increase in provisions at Barclays is massive," Jeremy Batstone, head of research at NatWest Stockbrokers, told Reuters. "Everybody was expecting provisions growth to be strong but that is very substantial."

Expectations of a lower opening on Wall Street had also put early pressure on the FTSE. Wall Street last night rose 56.5 points, or 0.7%, to 8736.5, after dropping as much as 143 points in earlier trade.

US shares moved up despite weaker than expected US growth for the second quarter, which cast doubt on the strength of the American recovery. The hi-tech Nasdaq market fell 15.9 points, or 1.2%, to 1,328.2.