FTSE close: Banks gain from reform reaction; GKN rises

 

17.15 (close)

A dealer monitors her screens on the trading floor of IG Index in London

Watching brief: Traders reacted to banking reforms

Banking stocks gained today after a key report shied away from recommending a full-blown split of their retail and investment arms.

The Independent Commission on Banking (ICB), which is working on measures aimed at protecting taxpayers against the need for future bailouts, instead proposed that big financial institutions should ring-fence their retail arms and bolster capital ratios in those operations.

Barclays and Royal Bank of Scotland were among the biggest winners following the release of the interim report, but despite their positive influence, the FTSE 100 Index closed 2.3 points down at 6053.4, after being marginally ahead for most of the day.

The pound was slightly stronger on foreign exchange markets as traders speculated that tomorrow's official inflation figures will reveal more price pressures in the UK, making a rates hike more likely.

Sterling was at 1.64 against the dollar and 1.13 against the single currency.

Barclays was the the blue chip index's biggest winner after it added 8.2p to 305.35p and Royal Bank of Scotland rose 1p to 44.4p, as it emerged that banks could continue to transfer capital between divisions as long as their retail banks met the 10% capital requirement.

Even Lloyds Banking Group, which is facing the prospect of having to divest more than the 600 branches originally proposed by the European Commission, rose by 0.2p to 62.4p.

Its chief executive, Antonio Horta-Osorio, said the extension to the sale programme was not in the best interests of customers and may even result in a delay in a new competitor coming into the UK market.

Mining giant BHP Billiton rose 46p to 2631.5p after Credit Suisse upped its rating on the stock and the company itself downplayed reports it is preparing a multi-billion dollar bid for Australia's Woodside Petroleum.

Other top flight risers included GKN after the car parts supplier reported a 14% rise in first quarter sales and said trading profits were up 42% on the same period a year earlier.

While GKN cautioned over the impact of Japan's earthquake and tsunami on the car manufacturing sector, shares rose 2.2p to 204.6p, a gain of 1% after Evo Securities said GKN had made a "blistering" start to the new year.

Another earthquake in Japan brought fashion firm Burberry's shares down 24p to 1159p as investors feared that one of its key markets would be further weakened.

Outside the top flight, Pinewood Shepperton's shares were 5% or 8.5p higher at 194p after the film studios firm said on Friday night that it had received a 190p a share takeover approach from Peel Holdings, which has investments including the MediaCityUK development at Salford Quays.

The biggest Footsie risers were Barclays up 8.2p at 305.35p, Royal Bank of Scotland ahead 1p at 44.43p, Resolution up 6.5p at 311.7p, and Cairn Energy ahead 9.1p at 454.2p.

The biggest Footsie losers were 3i Group down 7.8p to 267.3p, Burberry Group off 24p at 1159p, WPP down 14.5p to 746.5p, and IMI off 17p at 1027p.

15.45: Brent crude has topped $124 a barrel in trading today.

Meanwhile, gold was fixed at $1,468 an ounce this afternoon compared with $1,469 at the previous close.

The Dow is up 42.5 points at 12,422.6. In the absence of any economic news to provide direction, US investors are cheering on a flurry of acquisitions in the technology, health and food industries.

The FTSE 100 is 2.1 points higher at 6,057.8 as the end of the session approaches.

15.10:

Here's a detailed round-up of how bank shares have fared following the release of the IBC's report on their future.

We also have more on Pinewood Shepperton, which has seen its shares jump 6.5p to 192p after receiving an £88m bid approach from major shareholder Peel Holdings.

The Dow Jones is 42 points higher at 12,422 as investors get ready for Alcoa to kick off the first-quarter earnings season across the Atlantic.

The aluminium giant will report after today's session in the US.

The FTSE 100 is up 13.3 points at 6,069.

13.30:

The FTSE has drifted today, dipping below the water line before recoverung.

The Footsie is now 1.48 points up at 6057.23.

11.50:

We've had a few hours to digest the recommendations from the Independent Commission on Banking.

Barclays - which perhaps had the most to lose had Sir John Vickers recommended the forced break-up of banks - is 3.13%, or 9.3p, higher at 306.45p.

Royal Bank of Scotland is 0.93p, 2.14%, up at 44.36p and Lloyds Banking Group is 0.09p, 0.14%, up at 62.25p.

HSBC is the only bank to fall following the report - down 3.5p to 661.2p.

Overall, the FTSE 100 is 9.6p higher at 6065.35.

From the corporate diary today, car parts giant GKN said its business remains on track despite disruption to Japan's auto industry and knock-on supply chain shortages outside the country.

The Redditch-based company said sales were up 14% to £1.5bn and trading profit was 42% higher at £119m in the first quarter of 2011.

Its shares rose 4.5p to 206.9p in trading today. Here's more.

10.00:

The FTSE 100 is treading water as investors pore over the details of the long-awaited IBC report on the future of banks.

The blue chip index moved up in early trading but by mid-morning it was off 9.6 points at 6,046.1.

Bank shares rose after the Commission's interim report stopped short of proposing the most radical of measures for overhauling the industry.

Barclays and Royal Bank of Scotland were both 3% higher - 11p and 1.3p at 308.1p and 44.7p respectively - as the Commission signalled that it was not planning an outright split between investment banking and retail operations.

Even Lloyds Banking Group, which is facing the prospect of having to divest more than the 600 branches originally proposed by the European Commission, rose by 1p to 63.1p, while HSBC was up 0.3p to 665p.

Other top flight risers included GKN after the car parts supplier reported a 14% rise in first quarter sales and said trading profits were up 42% on the same period a year earlier.

While GKN cautioned over the impact of Japan's earthquake and tsunami on the car manufacturing sector, shares still rose 4.8p to 207.2p, a gain of 2%.

Outside the top flight, Pinewood Shepperton's shares were 4% or 8p higher at 193.5p after the film studio firm said on Friday night that it had received a takeover approach from Peel Holdings, which has investments including the MediaCityUK development at Salford Quays.

In currency, the pound at 9am was $1.6328 compared to $1.6340 at the previous close. Against the euro, the pound was at €1.1291 compared to €1.1317 at the previous close.