Financials drag FTSE down
Depressed financial stocks dragged on the market today as Lloyds TSB rattled investors with its latest trading update.
The high street group said it was satisfied with its performance so far this year but the City’s focus was on hefty provisions of more than £200 million.
The update was the second in just two days to depress trading after Barclays warned yesterday about full-year profits.
And with blue-chip shares under pressure once again, the FTSE 100 Index fell 41.2 points to 4034.2 by lunchtime.
The top flight performed strongly in November, prompting hopes it could breach 4200, but the new month has brought little in the way of festive spirit.
Another fall on Wall Street last night also sapped confidence and traders were expecting a repeat performance when US markets open later this afternoon.
Yet the main drag on today’s session was weakness across banks and the wider financial sector.
Barclays, which has warned profits are likely to be at the low end of targets, built on losses yesterday with a 13p drop to 420p.
But the heaviest fall in the sector came from Lloyds, which tumbled 25p to 505.5p – a 5% decline.
It has put aside £205 million for mis-sold endowment mortgages and pensions while warning that the bad debt provision for corporate lending is set to rise.
It has also been fined a record £1 million by the Financial Services Authority for mis-selling endowment mortgages in the 1990s.
Other banks caught up in the gloom included Abbey National, off 21p at 599p and Royal Bank of Scotland, down 42p at 1509p.
Among the insurers, Aviva shed 20p at 511p, Prudential eased 18p at 497.5 and Legal & General was 3.75p weaker at 107.5p.
Fund manager Schroders bucked the trend, however, climbing 25.5p to 562.5p as it said its cost cutting programme was on target.
Away from the financial sector, packaging group Rexam gained 25.5p to 413.25p to top the FTSE 100 risers board.
It told analysts today that the second half was living up to expectations and 2002 had been a “strong year”.
And among smaller stocks, transport group Stagecoach surged 7p to 25.75p – a 37% hike – as the City welcomed plans to overhaul its troubled Coach USA arm.
The group also said debts had been cut by more than £110 million and showed how underlying interim profits had remained stable.
