Footsie falls after UBS warning on banks

Wednesday 3 October 2012

The recent recovery in shares in Britain's part-nationalised banks was brought to a halt yesterday during a lacklustre session for the London market.

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Lloyds Banking Group and Royal Bank of Scotland were hit by a warning from broker UBS that profitability will be squeezed by regulatory pressures, prompting it to cut its price targets for the two stocks.

The top flight rose 1% on Monday following positive data from the United States, but reports that Germany is pressing Spain to delay its request for a bail-out unsettled traders, leaving the FTSE-100 index 11 points down at 5809.4.The euro was higher against the dollar and the pound, with sterling at 1.25 against the single currency and up slightly on the greenback at 1.61.Like Lloyds, Royal Bank of Scotland has enjoyed a decent run in recent weeks but finished more than 3% lower – off 8.9p to 257.5p – after UBS's warning over the levels of equity that banks are being asked to hold. Lloyds was down 0.95p at 39p.Barclays gave up 1.6p at 220.75p while HSBC was 7p cheaper at 580.5p.Elsewhere, building supplies firm Wolseley had a mixed session after it announced a 10% rise in trading profits to £658 million for the year to July 31.The company is proposing a one-off return of £350m to shareholders, but after rising by as much as 2% earlier on the shares closed 1p lower at £26.68.Among the risers, super-market Tesco was 2% higher ahead of results which are expected to show a 12% drop in half-year profits to £1.5 billion. With investors holding out hopes for a stabilisation in UK sales, the shares advanced 5.7p at 336.7p.ITV shares maintained their recent strong run – firming 0.6p to 90.6p – amid ongoing speculation it is a bid target for private equity firms.Engineering support services company Babcock International was near the top of the risers board after it said it was confident of meeting expectations for the current year.The shares were up 2% or 22.5p to 945p.British Airways owner International Airlines Group topped the Footsie on expectations that Qatar Airways will be joining the OneWorld Alliance.The shares advanced 4.7p to 159p.Among the biggest Footsie risers were BAE Systems up 6.8p at 334p and Fresnillo ahead 39p at 1920p, while among the biggest fallers were Evraz off 7.4p at 246.3p and Croda Inter-national off 54p at 2447p.

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Footsie falls after UBS warning on banks

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