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By Sudip Kar-Gupta
LONDON, June 24 (Reuters) - Britain's top shares index fell on Friday, led lower by banks and homebuilders, butstaged a sharp recovery from its initial slump caused by thecountry's decision to leave the European Union.
The FTSE 100 index initially dived more than 8 percent atthe open, and was poised to post its sharpest one-day drop sincethe aftermath of the Lehman Brothers collapse.
The FTSE 100 clawed back ground to finish 3.2 percent lowerat 6,138.69 points. Trading volumes were nearly five times theirdaily average.
Following the initial scramble in morning trading, marketswere reassured by statements from policymakers, and investorsstepped in to pick up shares of blue-chip dividend-paying,defensive companies such as GlaxosmithKline andAstraZeneca
Moreover, sterling's sharp drop also helped the shares ofexporters such as Unilever, Diageo and RollsRoyce
The index eventually ended the week posting a gain of some 2percent, having risen sharply earlier in the week onexpectations Britain would stay in the EU.
Banks and housebuilders, sectors seen to be most at riskfrom a weaker UK economy, remained the day's worst performers.Taylor Wimpey fell 29 percent while Lloyds andBarclays slumped 21 and 17.7 percent respectively.
Several traders said one principal reason for the recoveryover the course of the day included a pledge by Bank of Englandgovernor Mark Carney to support the market.
"Carney's comments helped the market back up," said BerkeleyFutures' head of trading Charles de Roeper.
They added a slump in sterling had also supported theFTSE's export-driven, international companies, since a weakerpound can make their goods more affordable to overseas buyers.
"All the FTSE 100 companies, except for financials, withmajority earnings outside the UK are boosted by the substantialfall in sterling which will inflate overseas earnings in thenext results," said Lorne Baring, managing director at B CapitalWealth Management in Geneva. (Reporting by Sudip Kar-Gupta; Editing by Vikram Subhedar)
