FTSE close: RBS, Lloyds, M&S down

By This Is Money
Updated: 12:50 EDT, 7 October 2010

17.30 (close)

News of a record 3.6% fall in property prices last month sent shockwaves through the lending and housebuilding sectors today.

The shock Halifax data dealt a blow to stocks such as Lloyds Banking Group and Charles Church owner Persimmon, with the wider FTSE 100 Index also in the red - down 19.3 points to 5662.1.

On the other side of the Atlantic, a fall in unemployment claims failed to cheer investors in the US, where the Dow Jones Industrial Average slipped into negative territory.

The US Labor Department said claims dropped by 11,000 to a seasonally adjusted 445,000 - the lowest level since the week ending July 10.

In London, the focus remained on the September house price figures, while the Bank of England also voted to keep rates at 0.5% and its Quantitative Easing (QE) programme at £200 billion.

The market showed little reaction to the Bank's decision, but it gave a boost to sterling - hitting 1.60 US dollars at one stage for the first time since February.

Currency traders had been nervous that the Bank might boost QE support, which would have hit the pound hard.

Today's Halifax figures rattled the banking sector as shares in consumer-focused lenders Royal Bank of Scotland and Lloyds dropped 1.7p to 47.8p and 2.5p to 73.9p respectively.

In the second tier, housebuilder Barratt Developments dropped 4.5p to 94.8p, Persimmon fell 16.4p to 376.5p and Taylor Wimpey declined 0.9p to 27.8p.

Retail stocks weathered the latest economic storm after Marks & Spencer posted a 5.1% rise in like-for-like sales in the second quarter of its financial year.

The retail chain beat City expectations with general merchandise sales up 7% and food sales ahead 3.7%.

M&S shares were 5% higher after a weak start to close up 19.2p at 410p.

There was no such rally for car parts-to-cycling retailer Halfords after it reported a 6.3% drop in like-for-like sales in the second quarter.

It highlighted a disappointing trading performance in the bicycle department and said it would launch more promotions in order to address the downturn. Shares were down 39p to 408p after analysts scaled back profit forecasts.

Elsewhere in the FTSE 250 Index, financial advisor Hargreaves Lansdown shed 18.9p to 452p after co-founder Stephen Lansdown sold £58 million worth of shares in the company, taking his stake down to about 20%.

Rank Group moved 3.5p higher at 125p after the company's third quarter trading update prompted Investec Securities to raise its price target for the Mecca bingo and Grosvenor casino owner.

With like-for-like sales up 7%, Investec said Rank had outperformed its expectations amid further signs of operational progress.

The biggest Footsie risers were Man Group up 12.1p to 249.8p, Marks & Spencer ahead 19.2p to 410p, Burberry up 25p to 1030p and GKN up 3.3p to 175.3p.

The biggest Footsie fallers were Kazakhmys down 83p to 1400p, Antofagasta off 64p to 1249p, African Barrick Gold down 28p to 610p and Cairn Energy down 18.8p to 433.5p.

16.00: The Footsie contiues to labour, down 16.38 points at 5665.01 as the close approaches.

15.15:

Shares on Wall Street have offered little encouragement to their London counterparts.

The Dow Jones opened slightly lower, and in early trading sits 5.64 points down at 10,962.01.

In London, the FTSE 100 is 12.12 points down at 5669.33.

13.30:

At lunchtime, the mood has impoirved and the FTSE 100 is just 1.78 points lower at 5679.61.

There has been a slight fall in response to the news that Bank of England policymakers kept rates at 0.5% and refrained from increasing quantititive easing from it's curtrent £200bn level.

Sentiment was knocked by figures this morning showing that house prices fell a whopping 3.6% in September.

In corporate news, Marks & Spencer enjoyed a bigger-than-expected rise in like-for-like sales of 5.3% in the second quarter of its financial year.

Sports betting firm Betfair confirmed plans for a stock market listing in a move set to value it at between £1.16bn and £1.48bn.

And the UK's second largest recruitment company Michael Page saw profits soar 37% in the third quarter.

10.20:

A record monthly fall in house prices reported by Halifax hit housebuilding and banking shares today.

The Halifax report, which revealed a 3.6% drop in prices last month, did little for the overall mood of the London market as the FTSE 100 Index ended its recent positive run to stand 18.1 points lower at 5,663.3.

The scale of the slump alarmed investors in the banking sector as shares in consumer-focused lenders Royal Bank of Scotland and Lloyds Banking Group dropped 0.9p to 48.6p and 1.9p to 74.5p respectively.

While the Halifax said a quarterly decline in prices of 0.9% was likely to provide a more accurate picture of the market, shares in housebuilders still dropped sharply with Barratt Developments off 3.4p to 95.8p, Persimmon down 10.9p to 382p and Taylor Wimpey 0.6p lower at 28.1p.

Retail stocks were also spooked despite Marks & Spencer posting stronger-than-expected sales figures for its second quarter. M&S shares were down 3.3p at 387.5p, while Morrisons fell 2.5p to 297.3p.

Antofagasta was among the top fallers, down 2.5% after Citigroup cut it to 'sell' from hold, citing valuation grounds.

ICAP was the top blue-chip performer, up 2.9% after Evolution said its September data confirmed a strong first half rebound for electronic volumes and reiterated a "buy" rating.

Halfords was one of the biggest fallers in the FTSE 250 Index after it reported a 6.3% drop in like-for-like sales in the second quarter.

It highlighted a disappointing performance in its cycles department and said it would launch more promotions in order to address the downturn. Shares were down 25.2p to 421.8p after analysts scaled back profit forecasts.