FTSE close: RBS, Lloyds up; Halfords down

By Reuters
Updated: 12:34 EDT, 7 April 2011

17.30 (close)

Rates decision: Hold was widely predicted

The FTSE 100 lost ground today after the retail sector was buffeted by the latest in a series of profits warnings.

Halfords and Carpetright provided further evidence of difficult conditions on the high street, as their gloomy updates dragged down top-flight retailers such as Next and Marks & Spencer.

The blue-chip index closed down 33.8 points at 6007.4 as news of another serious earthquake in Japan prompted jittery traders to dump stocks near the end of the session.

Japan was put on alert for a two-metre high tsunami following the 7.1 magnitude quake but as the market closed traders were still waiting to hear how much destruction had been caused by the latest incident.

Equity markets were largely unmoved by the Bank of England's decision to leave its base rate at a record low of 0.5% for the 25th month in a row and the European Central Bank's widely expected move to hike rates to 1.25% from their record low of 1%.

But the announcements did move the currency markets, as the euro followed the pound downwards after the ECB gave no indication that a second rates hike was imminent. The pound was up against the single currency at 1.14 but was down against the greenback at 1.63.

Retailers, which had yesterday staged a mini-recovery following a better-than-expected update from Marks & Spencer, were forced back by more gloomy news.

Halfords lowered its profit range for the year to £124m to £127m, down from £127m to £135m, while Carpetright said profits for the year to April 30 were likely to be no better than the level achieved in the 2008/09 financial year.

Shares in FTSE 250 Index-listed Halfords dropped nearly 6%, or 21.5p to 347.1p, while Carpetright fell 38p to 633.5p.

In the top-tier, Next dropped 44p to 2052p, Kingfisher pulled back 5.5p to 259.4p and Marks & Spencer was down 3.7p at 356.9p.

Portugal's request for financial assistance failed to have much impact as banking stocks provided some support to the market.

The banks were lifted as it appeared the impact of the UK's tougher capital regime may no longer be such a disadvantage after two European banks announced plans to raise £11.5bn of fresh capital.

Royal Bank of Scotland rose 0.1p to 42.9p, HSBC was ahead 6.8p at 667.2p, while Barclays improved 0.5p to 295.3p.

Oil giant Cairn Energy was down 2% after the deadline for a deal with miner Vedanta Resources for Cairn's India assets was pushed back to May 20. Cairn dropped 10.5p to 445.9p, while Vedanta was off 66p at 2431p.

Outside the top flight, recruitment firm Hays dropped 4% after revealing strong growth internationally but further declines in the UK public sector. Shares were down 5.1p to 114.4p.

The biggest Footsie risers were Aggreko up 22p to 1696p, HSBC ahead 6.8p at 667.2p, BAE Systems up 3.4p at 335p, and Essar Energy ahead 4p at 468p.

The biggest Footsie fallers were GKN down 9.3p at 199.9p, ITV off 2.8p at 75.9p, 3i Group down 7.7p to 275.3p, and Vedanta Resources off 66p to 2431p.

16.15: Stocks have fallen following reports that another earthquake has hit Japan.

The FTSE 100 is down 11.8 points at 6,029.3.

The Dow Jones dropped 45.8 points to 12,381.

14.50:

The Dow Jones is down 3.5 points at 12,423.3 shortly after the opening bell.

The FTSE 100 is still little changed, just 0.1 points off at 6,041.

14.15:

We have a close-up on Cineworld's expansion into the Spanish market.

Brokers have given the acquisition positive reviews but the cinema operator's shares are down 1p at 202.75p following the announcement.

US stock futures are higher after weekly jobless claims fell by more than forecast. CostCo's like-for-like sales growth in March bettered expectations.

The FTSE 100 is 5.9 points higher at 6,047.

12.15:

The Footsie slips 14 points now, down to 6,027, as the Bank of England held interest rates at 0.5% for the 25th straight month.

In the top-tier, Next dropped 37p to 2,059p, Kingfisher pulled back 1.7p to 260.4p and Marks & Spencer, which surprised the City with better-than-feared same-store sales growth yesterday, was down 2.6p at 358p.

Outside the top flight, recruitment firm Hays revealed it has struggled in the UK, offsetting strong growth in Asia. Its public sector business in the UK dropped 37% and shares were down 5.1p at 114.4p. We've got the full story here.

Meanwhile, cinema operator Cineworld was down 1.8p at 202p after it unveiled its first overseas expansion, agreeing to buy Spain's fifth-biggest movie chain Cinesur Circuito Sanchez-Ramade for an undisclosed sum.

11.15: The FTSE 100 is still trading flat - it's down 0.6 points at 6,040.5.

Away from the top flight index, we have more on Halfords, which has seen its shares slump after warning profits would be hit as a rebound in bicycle sales was overshadowed by a poor performance in car maintenance.

The group said it now expected full year pre-tax profits to be between £124m and £127m, down from a previous range of £127m to £135m.

Its stock slid 6% or 23.5p to 345.1p.

Meanwhile, Carpetright has dealt its second profit blow of the year as it contends with bleak retail conditions.

The floor covering specialist admitted its trading predicament would reduce earnings in the year to April 30 to around the £17.2m level achieved in the 2009 financial year.

Shares in the firm dropped 17.5p to 654p.

Futures trading points to a flat open on the Dow Jones as US investors await the ECB's interest rate decision. A trading update is also due from wholesale retail giant CostCo.

10.10:

Portugal's request for financial assistance failed to destabilise the London market today during a positive session for banking stocks.

The FTSE 100 index, which has risen to a seven-week high, rose and then slipped slightly, 2.6 points to 6,038.6, following steady trading in Asia and on Wall Street.

Banks set the pace in London amid signs that the impact of the UK's tougher capital regime may no longer be such a disadvantage after two European banks announced plans to raise £11.5bn of fresh capital.

Royal Bank of Scotland rose 0.8p to 43.6p and Lloyds Banking Group added 1p to 62.9p, while Barclays improved 4.65p to 299.4p.

Investors also welcomed an end to uncertainty over debt-laden Portugal, which confirmed it had asked the European Union for financial help.

'There's some relief that Portugal finally applied for the bailout most people thought they required ... Perhaps it reduces some macroeconomic risk and allows markets to move forward,' said Henk Potts, equity strategist at Barclays Wealth.

However, concerns were mounting that Spain could be next to feel the heat.

'When the markets smell blood they tend to look for a victim; they managed to do that with Portugal, they managed to do that with Ireland and Greece, and they'll certainly no doubt be looking at Spain very closely indeed,' Potts said.

Meanwhile, it was another grim session for the retail sector after profit warnings from Halfords and Carpetright.

The car parts and bicycles retailer now expects profits to be between £124m and £127m, compared with a previous range of £127m to £135m.

Shares fell 3% or 11.45p to 357.15p, while Carpetright dropped 19p to 652.5p after warning profits for the year to the end of this month will slip to the level seen in 2008/09.

Cairn Energy and Vedanta Resources were the sharpest Footsie fallers, off 8.9p to 447.5p and 41p to 2,450p respectively, after the companies extended the deadline for a $9.6bn deal for Cairn's India assets.

Investors are waiting for the Bank of England's interest rate decision for April, due at 1100GMT, with most analysts expecting no change from the present 0.5%.

The European Central Bank, meanwhile, is poised to raise interest rates from a record low 1% at 1145 GMT.

'The Portuguese bailout was really already priced into the market; the euro has hardly moved much lower at all. Markets really are focusing more on the interest rate decisions,' said Angus Campbell, head of sales at Capital Spreads.

'There is obviously a slight risk of a hike from the BoE ... Certainly a lot of people out there will be hoping that there won't be any raising of rates by the BoE because of the fragile state of the economy.'