FTSE close: Lloyds, RBS down; Northern Foods up

By This Is Money
Updated: 12:21 EDT, 24 January 2011

17.15 (close)

Market watcher: Shares are treading water

London's FTSE 100 Index shrugged off concerns in the banking sector today as a buoyant session on Wall Street helped blue chips make gains.

Lloyds Banking Group and Royal Bank of Scotland were among the heaviest fallers on the Footsie after a speech by the chairman of the Independent Banking Commission sparked fears over plans to overhaul the industry.

But the wider FTSE 100 closed 0.8% or 47.6 points higher at 5943.9, mirroring early session gains on US markets.

The Dow Jones Industrial Average rose 0.8%, boosted by technology stocks as Intel revealed plans to increase its dividend.

McDonald's released figures revealing a 2% rise in fourth quarter net income - in line with market expectations, but growth had slowed on the previous three months as major markets were hit by poor weather.

The pound fell back against most major currencies as traders took profits off the table after last week's surge on interest rate hike speculation.

Sterling fell to 1.17 euros, although it held firm at 1.60 US dollars.

Lloyds suffered the biggest loss on the Footsie in a poor session for banks following a speech by ICB chairman Sir John Vickers.

He appeared to rule out a full-scale break-up of the banks, but mulled plans to ring-fence their retail operations from investment banking and said important institutions should be required to hold more core capital than in the current regime.

Lloyds closed more than 3% lower or 2.3p to 65.1p, while Royal Bank of Scotland dropped 0.9p to 44.1p and Barclays fell 0.4p to 300.5p.

The latest political turmoil in Ireland, where the coalition government is on the brink of collapse, added to fears over the sector's exposure to the country and the eurozone debt woes in general.

The other main interest of the session came from the debut of International Consolidated Airlines Group following the merger of British Airways and Iberia.

Shares fell 3.1p from their opening price to 285p, although this was more than 1% higher than the pair's joint valuation on Thursday, when BA called time on nearly 24 years of trading under its own name.

The stock received an early boost as broker UBS initiated coverage on the new stock with a buy rating and a price target of 360p.

Outside the top flight, shares in bank note printer De La Rue plunged 15% after French takeover suitor Oberthur abandoned plans to acquire the firm following the rejection of its latest approach worth £926m. Shares closed 124.5p lower at 695p.

Attention was also focused on the food production sector after deals involving pizza and biscuits firm Northern Foods and Hovis maker Premier Foods.

Premier's shares were down 0.6p at 21.8p after selling its Quorn and Cauldron meat-free business to a private equity consortium for £205m.

But Northern Foods shares jumped 11p to 74p after it agreed a £342m takeover by the owner of Harry Ramsden's restaurants.

The deal on Friday night trumped a previously-agreed merger with Ireland's Greencore, which is now said to be considering whether to sweeten its offer for Northern.

The biggest Footsie risers were British American Tobacco up 90.5p to 2373p, Whitbread ahead 53p to 1773p, Rio Tinto up 104.5p to 4347.5p and Johnson Matthey up 46p to 1931p.

The biggest Footsie fallers were Lloyds Banking Group down 2.3p to 65.1p, Invensys off 9.6p to 325.4p, Weir Group down 41p to 1612p and Royal Bank of Scotland down 0.9p to 44.1p.

15.50: The FTSE 100 has made steady progress all afternoon and is currently 42.8 points better off at 5939.05.

14.50:

The Dow Jones has opened higher, up 35.1 points at 11,906.9.

There is no major economic news scheduled in the US today, but McDonald's fourth quarter earnings met forecasts while Halliburton reported increased earnings and revenues.

We have an update on banknote printer De La Rue. Its French suitor Oberthur is reportedly gearing up for an improved bid after its latest 935p-a-share approach over the weekend failed to find favour.

De La Rue's stock was down 15.5p at 804p.

The FTSE 100 was 19.4 points higher at 5,915.7.

13.15:

A re-cap at lunchtime - banks are taking a hammering today, falling on news of Government action to protect retail customers from failed investment operations.

Royal Bank of Scotland and Lloyds were the heaviest fallers in London today as the sector faced the threat of more action over balance sheets.

At lunchtime, the FTSE 100 was 17.75 points lower at 17.75.

While a speech by the chairman of the Independent Banking Commission ruled out a full-scale break-up of the banks, Sir John Vickers mulled plans to ring-fence their retail operations from investment banking and said important institutions should be required to hold more core capital than in the current regime.

The biggest loss in the banking sector was achieved by Royal Bank of Scotland, which fell 1.5p to 43.5p, while Lloyds dropped 1.8p to 65.5p and Barclays fell 3.45p to 297.45p.

The other main interest of the session has come from the debut of International Consolidated Airlines Group following the merger of British Airways and Iberia.

Shares were at 286.2p, a rise of more than 1% from the pair's joint valuation on Thursday, when BA called time on nearly 24 years of trading under its own name.

The stock received an early boost as broker UBS initiated coverage on the new stock with a buy rating and a price target of 360p.

Outside the top flight, shares in bank note printer De La Rue fell back after it rejected a new proposal worth £926m from French takeover suitor Oberthur. Shares were down 15.5p at 804.5p.

Attention was also focused on the food production sector after deals involving pizza and biscuits firm Northern Foods and Hovis maker Premier Foods.

Premier's shares were flat at 22.4p after selling its Quorn and Cauldron meat-free business to a private equity consortium for £205m. We've got more on that here.

11.40:

Heavy falls last week were blamed, in part, on weaker results from Goldman Sachs.

But overall, of the 57 companies in the S&P 500 that have so far reported this season, 42 have beaten expectations. That should give marets around the world a boost this week.

On Wall Street today, the futures markets are expecting a flat opening.

Bank in London, the FTSE 100 is 11.46 points up at 5907.71.

10.40:

We have more on Northern Foods, which could now become the centre of a tussle between Ireland's Greencore and 'chicken king' Ranjit Boparan.

The Irish sandwich-making firm said it is considering its options after Boparan's cash offer for Northern, which is still up 10.25p at 73.25p in today's trading.

Premier Foods is 0.59p higher at 22.94p after it announced the sale of its meat-free brands Quorn and Cauldron to a private equity consortium for £205m.

In currency, the pound is at $1.5963 compared to $1.5998 at the previous close. Against the euro, the pound is €1.1759 compared to €0.1781 at the previous close.

The FTSE is still trading in lacklustre fashion, up 4.1 points at 5,900.4.

10.10:

The FTSE 100 is struggling to find overall direction but banks including Lloyds and RBS are coming under pressure amid concerns that British banks will be broken up.

The blue chip index is up just 1.4 points at 5,897.7 in early trading as investors worry about the future of the banking sector.

Nick Clegg, deputy leader of the Coalition Government, voiced support for a break-up of banks, while chairman of the Banking Commission Sir John Vickers suggested that he may recommend such a move.

RBS fell 3% or 1.4p to 43.5p, while Lloyds was off 1.2p at 66.2p and Barclays dropped 2.8p to 298p.

International Consolidated Airlines Group made its debut on the market today following the merger of British Airways and Iberia.

Shares were 288.5p, a rise of more than 2% from the pair's joint valuation on Thursday, when BA called time on nearly 24 years of trading under its own name.

Elsewhere, Northern Foods' shares jumped 16% or 10.25p to 73.25p after it agreed a £342m takeover by Ranjit Boparan, the poultry magnate and owner of Harry Ramsden's restaurants.

The deal on Friday night trumped a previously-agreed merger with Ireland's Greencore, which is now said to be considering whether to sweeten its offer for Northern.