FTSE 100 close: Lloyds hit by shares placing

By This Is Money
Updated: 12:08 EDT, 8 June 2009

Shares in Lloyds were hit this morning as the shares that were left on the table after its successful rights issue closed on Friday were placed in the market.

Watching the news: Traders are looking for clues on the state of the economy

Lloyds Banking Group was 5.1p down at 61.1p after the £500m worth of shares were sold.

The cash raised from the heavily discounted share issue meant that the 43% taxpayer-owned bank can pay back a net amount of roughly £2.6bn to the Treasury.

Meanwhile, Barclays said it was in discussions with US giant BlackRock over its fund management business but added there were 'significant open issues' to resolve before a deal.

Shares edged 1.25p lower to 283.75p.

The losses in banking shares, along with a bad morning for miners, helped the FTSE 100 index lose 33.3 points to close at 4,405.2. London stocks received no support from Wall St, where the Dow Jones opened 109.1 down at 8,654.0.

Matt Buckland, dealer at CMC Markets says the Footsie has some resistance to overcome at the 4,500 level - something that continues to elude the London blue-chip index.

'Resurgent concerns over the feasibility of the US toxic asset plan could end up weighing on the banking sector in the near term while the strengthening dollar stands to erode commodity prices,' he said.

'So with the three biggest sectors - finance, petrochemicals and miners - all poised to face some challenges, progress could prove difficult to find in the near term.'

The strengthening dollar dragged down commodity stocks, with miners taking most of the top spots on the fallers' board. Vedanta fell 73p to 1,595p, Eurasian Natural Resources 29p to 653.5p and Anglo American 87p to 1,770p. Rio Tinto, which had been buoyed last week by news it was calling off its deal with China's Chinalco, dropped 76p to 2,925p.

Elsewhere on the fallers' board aerospace firm Cobham slid 5.8p to 174.3p after Goldman Sachs cut its rating to sell. The Goldman analysts instead favour Rolls-Royce - upgraded from sell to neutral - which helped the firm climb 6.25p to 335.5p to the top of a shortened risers' list.

Thomas Cook Group ended the day 0.25p down at 214.25p despite Goldman Sachs upgrading the stock to 'neutral' from 'sell'.

Among the retailers, JD Sports Fashion lost earlier gains despite reporting accelerating sales growth in the past eight weeks. Shares later slipped 1p to 470p.

Rivals Sports Direct and JJB Sports both lost ground, shedding 4.5p to 89.5p and 1.75p to 32p respectively.

The London Stock Exchange was also a faller in the FTSE 250, down 40.5p to 771p despite being a potential candidate for promotion back to the top flight in this week's Footsie reshuffle.

Plumbing giant Wolseley - another set for possible re-inclusion in the top tier after Wednesday's review - was faring better, ahead 10p at 1,083p, as was fellow FTSE 100 potential entrant 3i Group, up 8.5p to 260p.

News of a tie-up with Channel Five helped PartyGaming make ground. The Party Poker owner said it was to launch an online casino and bingo service branded under the 'Five' banner, and shares gained 4.25p to stand at 240p.

TOMORROW'S AGENDA

How did the nation's shops fare in May? Economists forecast a significant fall in year-on-year growth after sales lept by 6.3% in April thanks to Easter falling late this year as well as the sunny weather.

Howard Archer, chief economist at Global Insight, predicts a 2.9% rise in total sales, with sales up 0.9% on a like-for-like basis. But this is still a long way from the High Street oblivion that many feared Britain was heading for.

Overall, shoppers have become a little more inclined recently to splash out thanks to falling inflation and lower mortgage payments. Rising unemployment and growing debts remain problems, however. With many Brits nervous about the economy and jobs, they may curb spending further.