Cable & Wireless provides light relief.

(From Guardian Unlimited)

Away from the financials, there are some bright spots. Telecoms group Cable & Wireless , for example, is up 2.7p to 163p on growing hopes it will announce a demerger.

Citigroup issued a buy recommendation and raised its price target from 240p to 250p. The bank said: "News of a demerger is widely expected by the market on or before first-half results on November 10. In isolation, this is unlikely to drive a re-rating. We expect a package of measures, including confirmation of the incremental opportunities unlocked by a demerger (up to 95p a share in our view), an agenda for their implementation and a Thus integration plan with synergies.

"The Thus acquisition is essentially a bulk purchase of customers ? we estimate synergies in excess of ?65m by the end of year two."

And not all the banks are in the doldrums. HSBC is up 12.75p to 877.75p as Alex Potter of Collins Stewart recommended the stock as a safe haven. He believed HSBC would also benefit from a successful resolution to the Paulson plan.

Potter said: "The plan is likely to be renegotiated over the rest of this week (though with a break for Jewish new year) with a view to another vote in a week. Most commentators appear to be expecting a watered-down bill second time around. Secondly, the margin of defeat (225-208) was relatively small, so some small concessions would appear likely to secure the bill.

"The US government is clearly hoping that, with cleaner balance sheets, liquidity will return to the US banks and the wholesale money markets will become functional again."