The share prices of Northern Rock and Alliance & Leicester have rebounded strongly this morning in continued heavy trading.
A&L is up 26 per cent following yesterday’s 31 per cent fall, while Northern Rock shares have recovered by 10 per cent after falling by a further 35 per cent on Monday.
Over 260m Rock shares changed hands yesterday, compared to its average daily trading volume of 16m. By 11am this morning, over 50m shares had changed hands.
A&L saw similarly frantic trading with 27m shares changing hands yesterday compared to its average daily trading volume of 3m. This morning 11.5m changed hands, almost four times its daily average over the past three months.
Market rumours suggest heavy short-selling by hedge funds pushed down A&L’s share price so sharply towards the end of trading yesterday amid rumours that the bank had applied for emergency funding.
These rumours proved unfounded helping drive the strong bounceback this morning.
Bradford & Bingley, whose share price fell 15 per cent yesterday, has seen a 4.6 per cent recovery this morning.