Cheers all round as annual earnings soar.

Byline: By Louisa Nesbitt

Banks and telecoms stocks were the talk of the London market this week as the FTSE 100 Index held its position above the 5500 barrier.

HBOS ( owner of Halifax and Bank of Scotland ( attracted a wave of investment and sparked buying in a host of other financial stocks after becoming the second bank to forecast annual earnings ahead of expectations.

This helped the Footsie close at 5538.8 on Tuesday, although falls by oil stocks left it down at 5517.4 by the end of the week, below its opening mark of 5528.1.

The latest takeover tale in the telecoms sector sent Virgin Mobile shares up 14% over the course of last week.

Cable firm NTL announced details of its pounds 817m takeover approach on Monday, aimed at creating a media powerhouse to rival the likes of BSkyB and BT.

Although the 323p-a-share offer was rejected by Virgin Mobile for "materially" undervaluing the business, shares ended the week at 355p amid hopes NTL or a rival suitor would come up with a higher offer. BSkyB was 2% lower.

Investors in the banking sector breathed a sigh of relief as updates from a clutch of firms either met or bettered current market expectations.

Bradford & Bingley and Halifax Bank of Scotland were the major beneficiaries with share price gains of 7% and 5% over the week respectively, while Lloyds TSB, Northern Rock and Alliance & Leicester caught the positive sentiment.

Shares in Royal Bank of Scotland were little changed after a lacklustre reception to its "in-line" update, while Standard Chartered slipped 5% after writing off the value of its operation in Zimbabwe.

The question on M&S investors' minds earlier this year was whether shares would ever hit the key 400p mark that retail tycoon Philip Green was willing to pay in his failed takeover attempt last year.

Few would have expected them to perform as well as they have done ( this week alone the stock rose from a starting point of 459p to close at 479p on Friday.

With upbeat data from the British Retail Consortium boosting the retail sector, Next shares rose by just under 7%. The retailer has also benefited from speculation it could attract interest from private equity companies.

Online gaming giant PartyGaming saw the value of its shares soar by almost a fifth this week after saying annual results were likely to beat expectations.

The owner of PartyPoker.com ( which slumped sharply in September after a warning about future growth ( appeared to put these woes behind it when it said the launch of new games such as blackjack boosted the business.

PartyGaming now has a market value of pounds 5.6bn, well below its peak during the summer but higher than at its value at the time of its flotation in June.