FTSE 100 close: RBS shares 12% down
Royal Bank of Scotland called a halt to the banking rally today after the bank reported £7.5bn of bad debts and warned of a lengthy recovery.
Friday feeling: Will shares take a rest today?
RBS shares fell 12%, scrapping any paper profits the taxpayer notched up on its 70% stake in the bank after yesterday's session.
The wider FTSE 100 Index had been wallowing in the bad news and was down throughout the day until better than expected non-farm payroll figures from the US reversed the losses.
The US Labor Department said that American employers cut 247,000 jobs in July and that the unemployment rate eased to 9.4% in July, the first time the jobless rate has fallen since April 2008.
Shares jumped into positive territory on the news and the Footsie rallied 41.0 points higher to 4,731.6 by close of play.
Sterling continued its slide after yesterday's surprise move from the Bank of England to pump another £50bn into the economy - the pound fell a further 0.4% against the dollar and 0.2% against the euro.
Among stocks, RBS was the leading faller with a drop of 6.46p to 46.99p after posting a net loss of £1bn for the six months to June 30.
Lloyds Banking Group also retreated from recent highs with a fall of 2.58p to 102p.
Lloyds shares have risen in recent days on speculation the economic recovery may prompt the bank to raise capital independently and negotiate a watered-down version of the Government's toxic asset protection scheme.
Those banks without state aid also fell in early trading. Barclays later regained ground to stand 11p up at 365p and HSBC buoyed 6p to 667p by the market close.
Miners were responsible for much of the slump, with Lonmin off 18p at 1449p, Eurasian Natural Resources 31p lower at 848.5p and Vedanta Resources down 35p at 1825p.
Investors took refuge in defensive stocks as pharmaceutical firms AstraZeneca and GlaxoSmithKline rose 70p to 2792.5p and 27p to 1166.5p respectively.
Utilities were also making gains, with Scottish & Southern Energy lifting 20p to 1108p and International Power cheering 4.4p to 251.4p. Vodafone was close to the risers board with a gain of 2.81p to 127.95p.
Elsewhere, retailers failed to hold on to early gains despite another strong set of weekly sales figures from department store business John Lewis.
Marks & Spencer and Next darted from black to red and back throughout the day but closed 3.7p up at 349.5p and 5p up at 1705p respectively, amid the more cautious wider market sentiment.
Outside the top flight, Sports Direct shares fell 2.47% to 88.75p after the Office of Fair Trading referred its purchase of 31 stores from rival JJB Sports for investigation by the competition Commission.
Sports Direct failed to sell five shops after the OFT had raised competition concerns.
'Although the exact details of the stores under the spotlight is unclear, we believe it unlikely that the annual liability to Sports Direct from unmitigated occupancy costs would exceed £1.5m,' Singer analyst Matthew McEachran says.
'Nonetheless, this news could weigh on the shares which have performed well over the last quarter (up 32%),' he adds.
Greggs, meanwhile, was up 5.54%, or 21.1p to 402p ahead of interim results next Tuesday, which are expected to show further like-for-like sales improvement.
Anglo-Dutch IT services firm Logica posted a better-than-expected 8% rise in operating profits for the first half.
Shares in the company, which is listed in London and Amsterdam, have risen 25% in the last week after better-than-expected quarterly earnings from peers Capgemini and Fujitsu. Today they were 2.6p down at 111.6p.
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