FTSE in-depth: Lloyds' loss hits FTSE's gains

By Geoff Foster for MailOnline
Updated: 03:53 EDT, 18 December 2010

Having sailed through the potentially dangerous early triple witching expiry of December stock options, index options and future contracts, the Footsie breached 5,900 and had the magic 6,000 level well in its sights.

That is until Lloyds Banking Group's shock 'Irish' profits warning slammed the brake on. The index quickly reversed a 20 point gain to stand 24 points lower but thankfully a general sell-off failed to materialise.

The resilient Footsie closed only 9.37 points lower at 5,871.75.

Moody's, the credit rating agency, had already slashed Ireland's credit rating by some five notches but Lloyds' bearish statement still caught everyone on the hop.

As shares of the part-nationalised bank fell to 66.5p after warning it has seen a significant deterioration in market conditions in the Republic of Ireland and will have to set aside a further £4.3bn for impairment charges, sellers were all over Royal Bank of Scotland like a rash.

Fears that RBS, which is 83pc owned by the UK tax payer, will inevitably have to soon come clean on its exposure to the stricken Irish economy saw the shares drop to 37.63p before closing 2.3p or 5.7pc lower to 37.82p.

Barclays cheapened 3.75p in sympathy to 259.75p.

News that BarCap boss Bob Diamond will be taking over as chief executive of the bank from John Varley at the end of the year raised a few eyebrows.

Varley was to hand over at the end of March but Diamond apparently was keen to get started in the hot seat earlier.

Drugs giant Astra Zeneca was certainly in need of a tonic at 2941p, down 212p, after the US Food & Drug Adminstration failed to give marketing approval to Brilinta, the group's blood-thinning treatment. Forever rumoured to be on US giant Microsoft's shopping list, software group Autonomy jumped 78p to 1543p.

Renewed buying this time though was on the back of a Panmure Gordon recommendation and increased target price of 1726p in the wake of a set of better-than-expected figures from American peers Oracle, Accenture and RIM.

Analyst George O'Connor said that together the results point to a strengthening of the corporate business-to-business IT market. The most obvious beneficiary on the UK market is Autonomy.

A report that Gartmore will soon collapse into the arms of rival Henderson Group (flat at 130.5p) lifted shares of the struggling fund manager 6.05p to 104.8p.

Heritage Oil added 0.90p to 424.00p after broker Canaccord Genuity advised clients to buy ahead of forthcoming results of the Miran West-2 testing programme in Kurdistan, which it regards as being key in terms of derisking the field.

A positive pre-close trading statement helped shares of bus and trains group National Express accelerate 15.6p to 242.8p. Chief executive Dean Finch raised profit expectations for the year today by saying each of its businesses had performed well in the fourth quarter.

ITE jumped 25.8p to 244.10p as analysts gave the thumbs-up to its '33m acquisition of MVK, the number three independent exhibition operator in Moscow. Investec expects the deal to be 10pc earnings enhancing next year.

Outsourcer Tribal Group advanced 4.50p to 46.50p after once again announcing it has received a bid approach. Last month Tribal said that talks with another interested party had collapsed.

Dealers reckon a private equity player could be about to swallow the company which trains NHS staff.

Despite a fairly upbeat AGM, online betting company Sportingbet slipped 0.15p to 58.95p. The board remains confident in the outlook for the financial year. Oriel is a buyer and says the statement confirms that trading is on track.

Although its £15.2m acquisition of privately-owned component manufacturer Accudynamics was deemed fairly bullish, Halma lost 1.9p to 359.8p.

Profit-taking after recent strength left Optos 12.00p lower at 170.00p. The medical retinal imaging company is one of stockbroker Brewin Dolphin's top share picks for 2011.

Intandem Films featured a gain of 0.75p or 17pc at 5p following annual results. The operating loss was reduced to £642,000 from £991.593 in 2009. The company has developed a slate of 20 new films for which it has been appointed as Executive Producer and International sales company with total budgets in excess of £150m.