FTSE 100 close: Lloyds shakes off HBOS hit
A £4bn loss caused by toxic loans at acquisition HBOS failed to prevent shares in Lloyds Banking Group from surging by more than 10% today.
Market watcher: The FTSE is ecpected to struggle to make gains today.
The absence of major surprises in the figures also encouraged buyers as the part-nationalised lender rose 8.93p to 93.2p, narrowing the paper loss faced by the taxpayer to around £3.5bn.
Other banks were also in positive territory, but the wider market took a hit from a poor start on Wall St to leave the FTSE 100 Index 24.2 points points lower at 4,647.1.
The Dow Jones by 5pm London time, was 83 points lower at 9,237.2, after investors got some unpleasant news about the health of the service sector.
'Tomorrow sees the start of an important couple of days on the economic calendar with the Bank of England and European Central Bank rate decisions and the weekly job numbers in the US,' said David Fineberg, Head of Trading Western at CMC Markets.
'Expectations for the rate decisions are somewhat subdued with no movement expected in rates. So it will be further talk of quantitative easing that may take the headlines. So after the strong gains over the last few days it now seems that we are beginning to tiptoe lower.
'The big question will be just how far the market falls if we continue to slide. The non-farm payroll data will give us an idea of the answer as a weaker number will undoubtedly cause a stir.'
As for today, miners and energy stocks provided the main downward pressure, with Royal Dutch Shell down 62p at 1528p and BHP Billiton off 36p at 1578p.
Silver miner Fresnillo fell 1.3% after Bank of America-Merrill Lynch downgraded the stock to 'neutral' from 'buy' in a review of the mining sector.
'While Fresnillo is a well run company with excellent assets, we think that precious metals could lag industrial metals for a period and Fresnillo is now quite fully valued in our opinion,' Bank of America-Merrill Lynch says in a note.
The broker expects metals prices to rise as the global economic recovery takes hold, with commodity consumers the United States and China expected to grow in 2010, prompting upgrades to 'buy' recommendations on Xstrata, Vedanta Resources, Kazakhmys and New World Resources.
As well as the Lloyds rise, Barclays added 8p to 336.5p and Royal Bank of Scotland rose 2.07p to 48.7p ahead of its figures on Friday.
Standard Life posted its half-year results today, but analysts were underwhelmed after the company revealed a 15% fall in new business sales and said its capital buffer had been eroded from £3.3bn to £3.1bn during the first half of the year. Shares were off 3.7p at 192.1p.
Outside the top flight, housebuilders were in positive territory after the Halifax said prices rose by 1.1% in July and Taylor Wimpey said trading conditions had improved significantly in the first half of the year.
Bellway rose 19p to 779p and Barratt Developments added 13.4p to 214p, but Taylor Wimpey failed to benefit - down 1.26p to 38.75p - even though chief executive Pete Redfern said Taylor's focus was now on driving value from existing and new sites.
Carpetright led the FTSE 250 Index risers' board - up 15% or 104.5p to 768.5p - after it surprised investors with a 1.4% rise in UK like-for-like sales for the 13 weeks to August 1.
Meanwhile, shares in Topps Tiles fall 1.5% in early trading after the tile and wood flooring retailer issued a trading update, and Seymour Pierce repeated its 'sell' recommendation on the stock. The shares later recovered to stand 2p up at 87.25p.
The broker says, 'Competition will intensify further as the DIY sheds, including B&Q, continue to improve their ranges.'
Seymour Pierce notes the share price has had a strong run since the start of the year, rising over 300% from the lows of about 20p. It says it is not forecasting a dividend for the next two years as the business conserves cash to reduce net debt.
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