Bank shares rallied on Tuesday after the government moved to guarantee the deposits of Northern Rock customers in an attempt to quell the growing crisis of confidence in the sector.

VIDEO

Chris Giles, economics editor,

on whether the Chancellor’s intervention has settled the Northern Rock jitters

In lunchtime trading, shares in Northern Rock were up 11 per cent while Alliance & Leicester – which on Monday denied that it had called on the Bank of England for support – rallied 25 per cent, recouping most of its sharp fall on Monday.