FTSE down slightly

Banking stocks were driven lower today as jitters in the run-up to the sector’s results season added to worries over the US debt crisis.

A review of European banks by Goldman Sachs highlighted ongoing doubts about the strength of Greece’s second bailout and also warned domestic banks were likely to be trapped in a slow growth environment.

The update did little for confidence in the London market, with the FTSE 100 Index 18.5 points lower at 5911.2 amid continued deadlock in talks to raise the US debt ceiling.

Results from Spanish giant Santander showing a 21% drop in half-year net profits, including a £538m (€608.9m) charge to cover the mis-selling of payment protection insurance in the UK, fuelled nerves ahead of results from all of the major players in the UK over the next week.

Lloyds Banking Group led the bank fallers, dropping 1.7p to 43.5p, while Royal Bank of Scotland was off 1.1p at 35p and Barclays slipped 7.6p to 221.1p.

Utility companies were under pressure after regulator Ofgem bared its teeth with a £2.5 million fine for British Gas owner Centrica because of failings in the way it handles customer complaints.

Centrica, which reports half-year figures on Thursday, saw its shares fall 5.7p to 320p, while Scottish & Southern Energy was the biggest faller overall in the sector with a slide of 70.5p to 1330.5p.

The biggest rise of the session came from software company Autonomy, which reported an 8.1% rise in second quarter profits and forecast a stronger-than-expected performance in the final quarter of its financial year.

Shares were 67.5p higher at 1723.5p, a rise of 4%.

In a positive session for technology sector, business software firm Sage rose 3%, or 7.95p to 285.05p, after the Newcastle-based company said it was trading in line with hopes, despite the difficult economic conditions.

There was also a rally for broadcaster ITV after it declared its first dividend since 2008 and reported a 45% increase in half-year earnings to £240m.

While ITV’s net advertising revenues are set to decline in July and August, shares were still more than 1% or 1.2p higher at 69.2p.

Outside the top flight, Provident Financial jumped 8% as the home credit provider said half-year pre-tax profits improved 15.4% to £62.3m (€70.5m).

It also announced a 5.1% increase in its interim dividend as shares lifted 78.5p to 1107.5p.

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