NEWS of the Hanson group's plan to demerge into four separate businesses electrified the company's shares and helped arrest a worrying slide by a flagging British market.

The Hanson demerger story, another startling rise on Wall Street, which hurtled to a fresh all-time high, and rumblings of a £1 billion-plus sterling bid for one of the few remaining independent British electricity companies, saw London just about creep into positive ground at the close.

Earlier the FTSE 100 index had suffered from a sharp sell-off, which some dealers attributed to a hefty sell programme, but which others said had reflected increased concerns that the much-hoped-for reductions in interest rates in the US and Germany might not occur.

The rumoured programme trade activity was said to have involved the sale of around £750 million worth of stocks across the European markets and kept the lid on continental bourses for much of the morning.

By the close of business in London yesterday there was no news on a rate cut in the US, but the chances of such a move were said to have increased substantially after weak economic data was released.

These included a lower-than-expected increase in US retail sales and a much-weaker-than-expected consumer confidence index.

Footsie ended a volatile trading session a net 0.7 ahead at 3,735.3, while the FTSE Mid-250 index continued its run of out-performing the senior index, closing 6.6 higher at 4,095.7.

Turnover in equities at 6 p.m. reached 839.5 million shares and was well ahead of Monday's rather depressed 664.5 million. The total was given a big boost by the exceptionally heavy trading in Hanson where turnover was well in excess of 100 million - easily the highest ever in a single session.

Overall business was also lifted significantly by a fresh burst of unusually heavy activity in the banks, National Grid and a number of big conglomerates.

The banks continued to attract big selling pressure with the mortgage/savings sector, featured by Lloyds TSB, Abbey National and the Scottish banks, once again being roughly handled by marketmakers. The blame for the large-scale selling of the sector was laid squarely on the mortgage price war which flared up last week.

Electricity stocks were among the big winners yesterday, as talk that a £1 billion loan had been raised by a banking syndicate, to finance a bid for one of the handful of independent companies left.