• Text size      
  • Send this article to a friend
  • Print this article

FTSE holds up despite banking losses

London's leading shares index managed to hold its head above water yesterday, despite heavy losses for the banking sector amid ongoing fears over the eurozone.

Investors dumped financial stocks as borrowing costs in Spain moved past 6% and closer to the unsustainable levels that forced Greece, Portugal and Ireland to seek an EU bailout.

The FTSE 100 Index pared gains to close up 14.5 points at 5666.3, as positive US retail sales figures boosted sentiment and a takeover in the utility industry boosted the sector's stocks.

The US Commerce Department said retail sales in the US rose 0.8% in March, against expectations of a 0.3% rise, which lifted hopes of a resurgent recovery in the world's largest economy.

The pound was up against the euro at 1.21 as the single currency was hit by concerns over Spain and its impact on the eurozone. Sterling was ahead against the US dollar at 1.58.

JPMorgan Cazenove downgraded the European banking sector to neutral from overweight and added to the eurozone fears to ensure a poor day for the banks.

The broker is worried that funding costs have increased and will hurt the outlook for profitability at a time when there is already great uncertainty.

Lloyds was down nearly 4% or 1p at 29.7p and Royal Bank of Scotland fell 0.8p to 24.3p, while Barclays dropped 4.1p to 210.8p, even though a note from Investec Securities reinforced its buy rating on the stock. All three were among the Foostie's biggest fallers.

Other fallers included insurer Aviva, which dropped 7.4p to 298.3p, while Man Group was 4.9p lower at 105.1p. However, the wider index was held afloat by a strong show from the utility sector, which was boosted by the valuation placed on International Power after its directors agreed a £6.4 billion deal for GDF Suez to buy the 30% of the business it does not already own. The group was 3% or 12.9p up at 416.8p.

The buy-out price gave a lift to other power firms, with Southern Electric owner SSE up 18p at 1358p and Centrica 5.1p higher at 318.8p.

Other risers included fashion group Burberry, which climbed 21p to 1586p on expectations that sales would be around 20% higher when it posted an update for the second half of its financial year today.

The biggest Footsie risers along with International Power were Croda International ahead 58p at 2190p, GKN up 4.5p at 203.7p and Polymetal International ahead 18p at 985.5p.

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.