Banks made strong gains on FTSE
Speculation of a further round of state aid for the ailing banking sector saw blue-chip banks make strong advances on the London market today.
News of a lunch for industry top brass at the Prime Minister’s weekend Chequers retreat on Sunday helped banks dominate the risers board, with shares up by as much as 7%.
But the wider FTSE 100 Index closed down 22.4 points at 4426.2 as volumes began to pick up after the Christmas and New Year break.
Lower commodity stocks were responsible for much of the decline as miners lost ground.
Meanwhile there was also a fall of almost 4% – 12.8p to 350.3p – for Tesco amid expectations that it will disappoint with Christmas trading figures on Tuesday.
Lloyds TSB set the pace at the top of the risers board – up 9.2p at 140.7 – as signs of extra government aid prompted Credit Suisse to upgrade the stock from underperform to neutral. Merger partner HBOS added 4.3p to 84.1p.
The pair announced that the taxpayer would be left with 43.4% of the combined bank after existing investors snubbed the offer of £13bn (€14.4bn) in new shares.
Their tie-up was also rubber stamped by the High Court in Edinburgh paving the way for the creation of the superbank Lloyds Banking Group.
Royal Bank of Scotland also posted gains amid revived hopes of a sale of its insurance businesses.
RBS was 1.9p better off at 55p after reports that Aviva’s former UK operations chief Patrick Snowball had teamed up with BC Partners and Apollo Management to consider a potential offer bolstered the stock.
Other gainers included Barclays, up 5.6p to 184.6p, and HSBC, which cheered 10.25p to 638.75p.
But hedge fund Man Group moved in the other direction after Citigroup brokers downgraded the firm to sell. Man was near the top of the FTSE fallers board with a 6% fall, shedding 13.75p to 230p.
Oil also fell below 40 dollars a barrel on fears over weakening demand amid rising unemployment. This put pressure on miners and oil heavyweights, with BP off 10p at 509p. Rival Royal Dutch Shell was 15p down at 1773p.
Miner Eurasian Natural Resources led the fallers board, down nearly 10% – off 32.25p at 334.75 – followed by gold miner Randgold Resources down 234p at 2510p and Antofagasta, down 37.25p at 424.75.
On a quiet day for corporate news, car dealership Inchcape fell 9% after it confirmed it was looking at potential fundraising options. Amid speculation this could mean a rights issue or share placing, Inchcape fell 2.75p to 42p.
