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Lloyds Banking shares recover as profit up

Lloyds Banking Group and BSkyB gave another boost to the FTSE 100 Index today in a session when the pound rose to a new four-year high.

Sterling's latest milestone against the US dollar saw it move closer to the 1.70 barrier after better-than-expected manufacturing figures fuelled expectations that the Bank of England will increase interest rates early next year.

The FTSE 100 Index, which is trading at its best level in two months, rose another 28.8 points to 6808.9 on the back of strong trading updates.

BSkyB was 2% or 20.5p higher at 900.5p as the pay-TV broadcaster addressed City concerns about the impact of competition from BT by revealing it added 74,000 new TV customers in the first three months of this year.

The company said this was more than double the growth rate seen in the same quarter a year earlier, while it sold a total of 764,000 subscription products in the period, bringing the figure to 2.4 million for the year to date.

The third quarter update reassured the City following earlier fears that the number of TV subscribers was set to fall for the first time in a decade.

At Lloyds Banking Group, shares recovered from recent weakness to stand 4.1p higher at 79.5p, a rise of more than 5%.

The rally came after chief executive Antonio Horta-Osorio revealed that underlying profits rose by 22% to £1.8 billion in the first quarter of 2014.

Supermarkets were again in the firing line after Morrisons announced another salvo in the industry's ongoing price war.

The Bradford-based chain is cutting the price of 1,200 products in order to win back customers, but the impact of the strategy on margins meant shares in all the major listed players fell sharply. Sainsbury's was 10.6p lower at 325.1p, Tesco dropped 6.4p to 286.5p and Morrisons eased 3.4p to 197.5p.

Outside the top flight, shares in outsourcing firm Serco endured another rocky session after new boss Rupert Soames raised £160 million from City investors in order to ensure the company remains within its debt limits.

The move came as Serco highlighted the scale of the challenge facing Mr Soames by making a sharp downgrade to its earnings guidance for 2014. Serco's troubles stem from a scandal-hit 2013 in which it was forced to refund the Government £68.5 million for overcharging on criminal tagging contracts.

Shares have halved in value since the summer period but were flat yesterday at 340p after falling by as much as 5% earlier in the day.

The biggest FTSE 100 risers were Lloyds Banking Group up 4.1p at 79.5p, Aggreko ahead 68p at 1645p, Hargreaves Lansdown up 45p at 1215p and BG Group ahead 39.5p at 1237.5p.

The biggest fallers were Sainsbury's down 10.6p at 325.1p, Fresnillo off 21.5p at 830p, Tesco down 6.4p at 286.5p and Randgold Resources off 102p at 4678p.

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