Stock market latest: Goldman fillip for banks

By This Is Money
Updated: 12:11 EDT, 14 April 2009

Disappointing US economic data held back gains on London's leading share index today as falls on Wall Street offset another strong session for banks.

Not pretty: BT Group could be suffering a case of the Gremlins

Blue chip banking stocks raced higher after strong results from US giant Goldman Sachs gave the sector a boost and raised hopes that the worst of the financial crisis could be over.

But news of an unexpected drop in US retail sales hit wider investor sentiment, leaving the FTSE 100 Index 5.3 points up at the close, at 3989.

Other gloomy economic indicators, including business inventory data and wholesale inflation figures, added to fears that the world's biggest economy was far from recovering.

However, the rally among British banks continued apace thanks to Goldman's better-than-expected £1.1bn first quarter profits, helping send Barclays' share price to its highest in more than five months.

Goldman's results - unveiled last night a day earlier than scheduled - followed those from fellow US bank Wells Fargo on Thursday, which had already helped put the battered sector in favour.

Lloyds Banking Group and Barclays both posted double-digit percentage gains, adding 8.4p to 87.9p and 18p to 195.5p respectively.

Barclays was also buoyed by weekend reports that it could still sell its entire asset management arm, despite the £3bn iShares deal struck with CVC on Thursday. Elsewhere Royal Bank of Scotland was ahead 0.2p at 29.2p.

Among insurers, analyst comments that recent share price falls were overdone saw many major players in the sector rally strongly. Legal & General - one of the Footsie's leading risers - added 5.7p to 54.5p, Friends Provident gained 3.7p to 68.6p and Standard Life was 9.7p better off at 183.1p.

It was a similar story for miners after Vedanta Resources - upgraded by brokers at Barclay Capital - cheered 134.5p to 1008p, or 15%. Kazakhmys lifted 47.5p to 513.5p and Xstrata rose 41p to 613.5p.

Investors in telecoms giant BT however endured a volatile session. The stock began the day at the top of the fallers board, down by as much as 6% after newspaper reports said the telecom group's annual results next month may include a £1.5bn write-down stemming from its global services division.

Shares then rallied to leave BT in the black, closing 0.1p higher at 81.1p - despite a dividend cut in the offing.

British Airways shares were nearly 1% or 1.4p higher at 162.3p, in spite of a move by Australian airline Qantas to cut its profits forecasts and axe more jobs.

But among the fallers, BP lost ground after a broker downgrade and lower crude oil prices amid expectations of falling demand. The oil major, which is holding its annual general meeting on Thursday, lost 7.5p to 438.5p.

Outside the top flight, Britvic shares were almost 4% higher, up 9.75p to 255.25p, after the Robinsons and Fruit Shoot company said it had successfully arranged new banking facilities through to 2012.

The biggest Footsie risers were Vedanta Resources up 134.5p at 1008p, Icap ahead 45.25p at 388.5p, Legal & General up 5.7p at 54.5p and Lloyds banking Group up 8.4p at 87.9p.

The biggest Footsie fallers were British American Tobacco down 75p at 1495p, BAE Systems down 14p at 323p, Inmarsat off 18.75p at 485.25p and Reed Elsevier down 15.25p at 460.25p.