FTSE close: RBS up; Lloyds and Cairn down

By This Is Money
Updated: 12:31 EDT, 29 November 2010

17.30 (close)

Stock markets and the euro took a fresh hammering today as Europe's sovereign debt crisis refused to loosen its grip.

Ireland's £72bn rescue package at the weekend offered only a brief respite as investors remained worried about the economies of Portugal and Spain and the potential for further bailouts.

The FTSE 100 Index started the day more than 40 points higher but a weak opening on Wall Street added to London's faltering performance as the top flight slumped 117.7 points by the close to 5550.9 - a drop of 2%.

It was a similar picture in Europe, while the Dow Jones Industrial Average was down by more than 1% as investors overlooked decent sales figures from the Thanksgiving holiday to focus on the uncertainty in Europe.

Analysts fear that markets will struggle for direction until Friday when the main event is expected to be the release of new US unemployment figures.

The euro suffered another bleak session against the dollar, falling by more than 1%, while the greenback was also higher versus the UK pound.

This put pressure on the value of dollar-driven mining stocks as Vedanta Resources fell 65p to 2010p and Eurasian Natural Resources dropped 26p to 883.5p. Other fallers included Cairn Energy, which declined 17.4p to 377.6p, while Tullow Oil shed 31p to 1151p.

London's banks weathered the latest European storm having sustained heavy losses at the end of last week. Barclays topped the risers board with a gain of 3.15p to 262.95p, while HSBC was up 0.3p at 651.4p and Royal Bank of Scotland held firm at 0.2p lower at 38.5p. Lloyds Banking Group surrendered a positive start to finish 1.3p lower at 60.5p.

Elsewhere in the top flight, BSkyB shares were 1.5p lower at 719p after the pay television operator unveiled plans for a joint venture free-to-air, Arabic language news channel across the Middle East and North Africa from 2012.

In a thin session for corporate news, British Airways fell 10.7p to 261.2p after the Unite union announced plans to ballot cabin crew over fresh strikes in their long-running dispute. The news came just hours after shareholders voted in favour of the airline's £5bn merger with Spain's Iberia.

Outside the top flight, Punch Taverns lifted 5% amid speculation that it planned to call time on nearly 6,000 pubs in a move to slash its £3bn debt mountain. Punch, which climbed 3.2p to 62.3p, will reportedly focus on its 800 managed pubs after offloading the leasehold estate to bondholders.

Meanwhile, shares in home interiors firm Walker Greenbank jumped 9% - up 3.75p to 44p - after the owner of brands including Sanderson and Harlequin reported record sales and profits for the past few weeks.

The biggest FTSE 100 risers were Barclays up 3.15p to 262.95p, HSBC ahead 0.3p at 651.4p.

The biggest fallers were Petrofac down 85p at 1392p, Cairn Energy off 17.4p at 377.6p, Old Mutual down 5.5p at 121.5p and Burberry off 44p at 996p.

15.25 On Wall Street, the Dow Jones opened lower and has fallen since - down 133.51 points at 10,958.49.

That will hardly help London shares, which are now 101.23 points down at 5567.47.

14.00

The Office for Budget Responsibility has reported as anticipated that the UK economy has recovered more quickly than was feared.

It expects UK GDP to grow by 1.8% in 2010, well above its June estimate of 1.2%.

The FTSE slid further into the red and is now down 71.83 at 5,596.87.

13.00

It's been a difficult start to the week for the FTSE 100, which has fallen steadily after early optimism over Ireland and the UK economy faded away.

London shares started the day higher but have fallen through the morning and now stand 61.68 points lower at 5607.02. A bailout for Ireland and an upwardly revised economic forecast from the Office for Budget Responsibility pushed shares higher early on.

The falls that followed are being led by mining and energy stocks. Cairn Energy, 14.6p (3.7%) down at 380.4p, was the steepest faller. Overall, 86 of the 100 blue chip companies were below the water line.

Banks were mostly in positive territory after a difficult end to last week, with Royal Bank of Scotland and HSBC up 0.5p to 39.1p and 12.8p to 773.9p respectively and Lloyds Banking Group down 0.5p to 61.4p after surrendering an initially upbeat start.

Elsewhere in the top flight, BSkyB shares were up 1.5p to 722p after the pay television operator unveiled joint venture plans for a free-to-air, Arabic language news channel across the Middle East and North Africa from 2012.

In a thin session for corporate news, British Airways rose 0.6p to 272.6p after its shareholders voted in favour of the airline's merger with Spain's Iberia.

Following the finalisation of the Ireland bailout, the yield on Irish government debt has improved.

The yield on 10-year Irish bonds fell slightly this morning ' indicating that the market is willing to accept a lower return on the money it lends the country.

Greece and Portugal also saw very slight improvements but Spain, Belgium and Italy saw their borrowing costs creep up

On the currency markets today, the pound was worth $1.5592 compared to 1.5595 dollars at the previous close. Against the euro, the pound was worth '1.1762 compared to '1.1788 at the previous close.

10.10

The Footsie has received a modest boost from a recovery in bank stocks after the Ireland bailout and hopes of an upbeat forecast for UK economic growth later today.

The index of Britain's leading shares was up 14.93 at 5,683.63 this morning.

Royal Bank of Scotland and Lloyds Banking Group - both exposed to Ireland's debts - rose 1.5p to 40.2p and 1.5p to 63.3p respectively following a £72bn rescue deal struck by EU finance ministers over the weekend. Barclays rose 7.1p to 266.9p and HSBC was up 11.9p at 663p.

Investors also took heart from an anticipated rise in the Office for Budget Responsibility's growth forecast from 1.2% this year to 1.7%. The independent watchdog is expected to say the economy is recovering faster than expected.

Company news was thin on the ground, but British Airways was up 3.7p to 275.6p as shareholders prepared to vote on the airline's £5bn merger with Iberia.

BP climbed 5p to 441p following news it is to sell its stake in Argentina-based oil and gas group Pan American Energy for £4.4bn as part of its efforts to raise cash to pay for the Deepwater oil spill.

Tesco, a 36%-stakeholder in Greenergy, fell 1.7p to 428.25p in the wake of reports the fuel supplier has launched a £1bn-plus bid to buy Total France's UK retail network.

Pub operator Punch Taverns rose 1.4p to 60.5p on reports it plans to sell its 6,000-strong leasehold estate to bond holders and concentrate on its 800 managed outlets.

Shares in home interiors firm Walker Greenbank leapt 6p to 45.5p after it reported record sales and profits for the past few weeks.