FTSE in-depth: RBS firms up on Treasury talks

By Etain Lavelle for MailOnline
Updated: 07:42 EDT, 22 January 2011

Financial stocks were in focus ahead of a speech by the independent commission on banking's Sir John Vickers later today.

Royal Bank of Scotland jumped 2.75p to 44.94p on talk, denied by the state-owned bank, that it is in discussions with the Treasury to exit the asset Protection agency, which was established in 2009 to insure its riskiest assets.

Fund manager Man Group was in sharp decline, however, after RBS reiterated a 'sell' stance but edged the price target slightly higher to 244p from 235p.

Man, which bought hedge fund GlG last year, revealed earlier in the week that it had been hit by a client pulling out a hefty $1bn worth of investments in the last quarter.

Still, heavyweight brokers, including Bank of America Merrill Lynch, lifted their price target to 380p from 355p, and UBS analyst arnaud Giblat said Man is 'well positioned to benefit from demand for alternative investments, with most funds clocking in double digit performance ahead of their respective benchmark.'

He reiterated his 'buy' advice on the stock on optimism that Man will continue to attract investments, and forecast inflows of $8.55bn in 2012. The shares closed down 12.10p at 282.00p. also among the banks, Standard Chartered shares were 34.00p lower at 1673p and shares in Barclays slipped back by 2.35p to 304.1p.

The FTSE 100 ended the session up 28.34 points at 5896.25, while over on Wall Street, the Dow Jones was up 58.31 at 11881.11 in early trading. The mood across the pond was lifted by a strong set of results from corporate bellwether GE, indicating that the world's largest economy is enjoying a recovery, which helped lift the index out of the doldrums.

Autonomy shares were catapulted to the top of the list of blue-chip risers after the cambridge-based software group announced a seven-figure deal with an unnamed U.S. law firm, and a further deal with U.S. telecoms group Verizon. autonomy shares jumped 56.00p to 1480.00p.

Invensys shrugged off price target downgrades from heavyweight brokers UBS and credit Suisse, to rise 5.40p to 335.00p. Credit Suisse retained its 'neutral' rating and 350p target but cut earnings forecasts for the next three years following 'the third disappointing trading update, which is a surprise given most other stocks in the sector have delivered consistent earnings beats'.

Retail stocks were in focus after grim news from the high street was blamed on the snowy weather in December. luxury goods group Burberry slipped by 14.00p to 1031.00p, despite a bullish statement earlier in the week, but smaller peer Mulberry surprised the market by revising forecasts for the second time in six weeks after enjoying a stellar festive season. Sales were up a chunky 66% in the six weeks to January 15 at its stores, the leather handbag maker said, pushing its shares up 55.00p to 1,305.00p.

Elsewhere, UK pharmaceutical group Shire Pharma shrugged off news it had been added to credit Suisse's Focus list, dropping 17.00p to 1639.00p.

Premier Foods shot to the top of the second line late in the session on talk that the U.K.'s largest food producer had secured a buyer for its meat-free products.

Premier said it was in advanced talks regarding the sale of the meat-free business in December, with Swiss-food group nestle widely touted as an interested party. More than twice the usual volume of shares changed hands in the session, driving the shares up to 1.60p higher to 22.35p.

On the second line, shares in oil and gas group EnQuest surged by 6.05% after a new oil discovery in the north Sea was announced by its partner, Valiant. The well, in the Don Southwest field, is 60% owned by EnQuest, with the remaining 40% owned by AIM-listed Valiant.

'The well is being suspended as a producer and will be brought on stream in the second half of the year, adding incremental volumes to existing production guidance,' said analysts at Evolution Securities. The shares ended up 8.30p at 145.5p.

Among the smaller caps, Petra Diamonds was boosted by news it is to acquire from De Beers South africa's second-largest diamond mine by production. The acquisition of the Finsch mine will see Petra's production jump by 10 to 15% in 2011. Shares in the rough diamond producer jumped by 18.00p to 180.00p following the news.

The AIM-listed producer, which is expected to list on the main market later in 2011, also announced a share placing that raised some £205m. chief executive Johan Dippenaar said: 'This acquisition will serve to immediately more than double our current production, significantly enhance earnings and cash flow and will increase our resource base to over 300m carats.'

Formula One Team Williams is gearing up for a possible flotation, but the British-based team is unlikely to join the London Stock Exchange - opting for a foreign market instead. Chairman Adam Parr said boss Sir Frank Williams will remain majority shareholder but declined to reveal further details. It is understood advisors have been appointed and the listing is so the company avoids falling into rival hands.