FTSE close: Banks and Rolls-Royce struggle

By This Is Money
Updated:

 

17.15 (close)

People walk past London's Stock Exchange

Taking stock: Shares look to end the week higher.

The FTSE 100 Index edged higher today as traders sat on the sidelines ahead of an expected interest rate hike in China this weekend.

The FTSE 100 Index fluctuated throughout the session as trading volumes remained low but managed to close 4.9 points ahead at 5812.95.

Encouraging economic signs in US failed to inspire investors, despite data revealing the trade deficit falling to its lowest level in nine months in October.

The rate of inflation in China is expected to lift to well above 4.5% this weekend, making an increase in interest rates likely, just a month after the central bank's last rate hike.

Tightening monetary policy could hit Chinese demand for overseas goods - which has been one of the drivers of the global economic recovery.

The pound was up against the euro at 1.19 and the dollar at 1.58 after producer prices output data came in just below 4% for November, indicating that inflationary pressures still remain a factor in the UK.

Tough new rules approved by European regulators clamping down on banker bonuses were also in sharp focus and led to a drop in banking stocks.

Barclays fell 3.8p to 272.2p and part-nationalised Royal Bank of Scotland dropped 0.6p to 41.7p.

Asian-focused bank Standard Chartered also continued its descent after falls yesterday on concerns over issues flagged up in its trading update.

Investors were left unsettled by its admission that costs were rising faster than revenues, with share falls compounded today after broker Bank of America Merrill Lynch lowered its rating on the bank.

Shares in the group fell 47.5p to 1762.5p.

BP was among a number of commodity firms seeing falls, down 0.4p to 455p.

Primark parent Associated British Foods dropped 14p to 1091p after giving a cautious outlook for the consumer environment in a trading update, despite confirming aims for annual revenue and profit growth.

Rolls-Royce was another faller after a report in the Financial Times suggested the group could face costs of $500m (£380m) in redesigns and fall out from its recent Trent 900 engine crisis.

The firm's shares pulled back from hefty early session declines, but still stood down 3p at 639p.

In the FTSE 250, Rentokil Initial was in the spotlight after it said woes continued at its troubled City Link delivery arm and confirmed the division's boss Stuart Godman had stepped down.

Its shares fell in early trade, but later clawed back to stand 1.9p higher at 96.9p.

The biggest Footsie risers were Vedanta Resources up 70p at 2275p, Cobham ahead 5.9p at 209.5p, Eurasian Natural Resources up 27p at 965p and Autonomy ahead 32p at 1377p.

The biggest Footsie fallers were Standard Chartered down 47.5p at 1762.5p, Burberry off 29p at 1108p, Intertek down 49p at 1885p, and BG Group off 30.5p at 1303p.

15.45: The FTSE has barely budged from its opening level and is still up only 1.82 points at 5,809.77.

But bank share losses have deepened as European regulators confirmed a clampdown on bonuses. The rules announced by the Committee of European Banking Supervisors are stricter than those agreed by the G20, sparking fears of a staff and/or relocation exodus to Asia or Switzerland.

Standard Chartered is down 49.5p at 1760.5p, Barclays is 2.5p lower at 273.5p, and RBS is off 0.33p at 41.98p.

The US market is also flat despite better than expected recent consumer sentiment data and figures showing the trade deficit had narrowed in October on a rise in exports. The Dow Jones is 0.57 points ahead at 11370.63.

15.05:

A lacklustre start in the US saw the Dow Jones edge 0.8 points lower to 11369.26.

The Footsie is just 3.62 points higher at 5,811.58 in mid-afternoon trading.

14.00:

The Dow Jones on Wall Street is expected to open moderately higher according to futures trading. It failed to make gains overnight despite news of a drop in claims for unemployment benefits.

Primark parent Associated British Foods has fallen 14p to 1091p after it gave a cautious assessment of the consumer environment - although it also confirmed annual revenue and profit growth targets.

The Footsie has remained subdued with investors wary of a imminent interest rate hike by China. An unexpected jump in Chinese exports has added to worries it will take moves to rein in inflation.

The FTSE 100 was still trading 1.16 points lower at 5,806.80 around lunchtime.

11.30:

High street retailer HMV has seen its shares slide a further 1p to 35.5p after a massive plunge on Thursday. Investors were spooked by news of deepening losses, a dividend cut and the impact of recent snowy weather on sales when the firm revealed first-half results.

We have more on Flybe's flotation, which valued the group at around £215m. The carrier is Britain's biggest domestic airline.

Rentokil's shares retook some lost ground and are now trading down 0.5p at 94.45p. The firm said City Link managing director Stuart Godman resigned by 'mutual agreement'.

The Footsie is still treading water, down 1.15 points at 5,806.81.

10.00:

The FTSE 100 is trading flat as the previous session's positive performance fizzled out and bank and Rolls Royce shares struggled.

The blue chip index was down 3.92 points at 5,804.04, amid thin UK corporate news and concerns that China might hike interest rates after it issues inflation data over the weekend.

Rolls-Royce shares fell 13.5p to 628.5p following a Financial Times report that suggested the Trent 900 engine crisis could cost it £380m.

Standard Chartered's stock fell for a second day after a broker downgrade in the wake of its disappointing trading update. It dropped 46p to 1,764p. Barclays was down 2p to 274p while RBS fell 0.15p to 42.16p.

Oil giant BP also faltered, shedding 5.4p to 450p. But Anglo Amercian was ahead 46p at 3,041p on positive news about the launch of an iron ore project in Brazil.

In the FTSE 250, Rentokil Initial fell 1p to 94p after it said woes continued at its troubled City Link delivery arm and confirmed the division's boss Stuart Godman had stepped down.

Regional airline Flybe started life as a public company. It priced shares at 295p in conditional dealings, at the lower end of the expected range, but the stock opened higher at 320p before easing back 1.5p to 318.5p. Official trading starts next Wednesday.

Mike Lenhoff, chief strategist at investment manager Brewin Dolphin, told Reuters: 'The steadiness of the market has been surprising but I think that reflects the growing confidence and conviction in the outlook for next year.

'This is backed up by the US which now has fiscal as well as monetary policy geared toward to expansion which I guess will lead to upward revisions (to estimates).'

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