RBS rise as experts say bank revival begins

By Lee Boyce
Updated: 12:48 EDT, 15 September 2010

Graeme Dickson, who writes the movers and shakers column, is away on holiday this week.

The FTSE 100 was up almost 3% since last Wednesday's finish, to close yesterday at 5567.

The price is the highest close in three months and highlights the current market resilience.

Good news came for British banks as they will have more room for manoeuvre than European counterparts under new rules designed to prevent a repeat of the banking crisis.

European regulators and central bankers have unveiled a new blueprint - dubbed Basle III after the Swiss town in which it was hatched - designed to ensure that banks carry sufficient cash to withstand future economic shocks.

The big movers of the week:

Three key risers

Royal Bank of Scotland

Tax-payer owned RBS had a strong week and analysts believe that a banking revival has only just begun, following laxer-than-expected Basle III rules on bank capitalisation issued over the weekend. Shares were up 8.8% at yesterdays close from last Wednesday, to 50.15p.

FTSE risers: RBS, Vedanta and Aviva share prices were up at yesterdays close

Vedanta Resources

Metals company Vedanta was up 7.5% at yesterdays close, as commodity stocks bounced back after a fall, including the benchmark price of crude oil. It finished yesterday at 2128p.

Aviva

UK's largest insurance company Aviva, closed last Wednesday at 390.6p and saw a 6.9% jump to 417.6p at close of market yesterday.

Three key fallers

Cairn Energy

Oil and gas exploration group Cairn Energy, which operates in Bangladesh and Nepal, has sold its stake in Cairn India for about $8.5bn (£5.5bn), although this is yet to be approved by the Indian authorities. The shares close yesterday at 440.3p – a 1.9% drop.

Aveva Group

FTSE 250 listed computer software and services group Aveva blew a fuse, after UBS downgraded to sell from neutral. The shares dropped to 1404p at yesterdays close, losing 2.8% from last Wednesday.

Halfords

Halfords, the UK's leading retailer of car parts, bikes and accessories, which has 387 stores around the country, employing more than 9,000 people saw a 3.3% drop from last Wednesday, as the shares dropped to 484p at yesterdays close.

Highlights and gossip from the week…

• Yesterday, Essar Energy soared to the top of the FTSE 100 Index, up nearly 4% or 16p at 464p, while silver miner Fresnillo was also up 2p to 1162p.

• TUI Travel dropped nearly 2% after Bank of America Merrill Lynch downgraded the tour operator to neutral from buy. Shares responded with a fall of 4.1p to 221.8p.

• At the start of the week, the potential of greater Chinese demand boosted the mining industry. Copper firm Kazakhmys benefited from this, seeing its shares lifted 5% or 67p at 1352p

• Primark parent Associated British Foods sank to the bottom of the FTSE 100, after it warned that increases in its costs and looming VAT changes would put retail margins under pressure next year.

• On Friday, shares in construction firm Morgan Sindall jumped 7% after it struck a £28m deal to buy the bulk of the social housing contracts operated by collapsed firm Connaught

• JD Wetherspoon shares fell despite a 7% rise in the pub chain's annual profits and amid signs of a good start to its new financial year.

• Thursday saw Barclays lifted 15.4p to 323.4p as concerns faded over the appointment of multi-millionaire banker Bob Diamond as chief executive.

• HMV shares fell more than 10% or 7.3p to 59.3p after it said first quarter like-for-like sales in the UK and Ireland dropped 14.9%. It blamed a weak gaming market and the impact of the World Cup on the pipeline of new releases.

• Oil giant BP as shares overcame the fall in crude prices to post a 5.35p improvement to 412.15p on Wednesday. This came after ratings agency Fitch upgraded BP's debt from its lowest investment grade BBB, up to A.

• Engineering firm Invensys lost some of the froth in its shares as takeover speculation started to fade – prices were down 2.3p or 1% to 266.9p.