FTSE close: RBS, Lloyds up; Burberry down

By ED MONK FOR THISISMONEY.CO.UK
Updated: 12:13 EDT, 21 January 2011

The FTSE 100 Index staged a mini-fightback today on the back of gains made by banking and mining stocks but it was still more than 100 points down on the week.

Friday feeling: Traders will hope shares can bounce back today.

The Footsie took a pasting on Wednesday and Thursday, dropping 188 points in two days, amid fears that China would increase its interest rates.

But it rebounded 28.3 points to 5896.3 today as fears about overheating in Asia began to subside. Despite the rise, the index was still well below last Friday's close of 6002.1.

Economists are predicting an imminent interest rate hike in China, as the country battles with stubbornly-high inflation - a move that would choke Chinese demand for commodities.

The speculation saw commodity stocks drop, while ongoing fears over the eurozone debt crisis and a weaker-than-expected show from American banks hit financials.

But these concerns eased today as investors shrugged off the weak sentiment and were boosted by yesterday's strong earnings report from US bank Morgan Stanley.

Royal Bank of Scotland soared more than 6% after the Financial Times reported the part-nationalised bank and Treasury officials were examining ways in which the bank could secure an early exit from the government's asset protection scheme. Shares were up 2.8p at 44.9p.

Morgan's 80% jump in fourth quarter profits also lifted the sector, with Lloyds up 0.6p at 67.4p, although Barclays was down 2.4p at 300.9p.

Miners, which were also boosted by marginally improved metal prices, made gains, with Anglo-Swiss group Xstrata up 13.5p at 1402p, platinum miner Lonmin ahead 9p at 1753p.

Investors shrugged off official figures from the Office for National Statistics, which revealed retail sales volumes declined 0.8% last month - the worst December on record.

Blue-chip retailers saw gains despite the report, with B&Q owner Kingfisher up 3.2p at 267.4p, Marks & Spencer ahead 1.1p at 368p and Primark owner Associated British Foods adding 7p to 1086p.

National Grid reversed earlier gains to finish up 3p to 542p after New York regulators granted a smaller-than-requested rate increase in the state.

Outside the top flight, shares in outsourcer Mouchel jumped 20% or 22.8p to 136.5p after construction firm Costain revealed a third takeover proposal worth more than £170m.

And luxury goods group Mulberry continued its run of form, rising 55p to 1305p after forecasting profits ahead of market expectations.

Finsbury Food, a supermarket cake supplier involved in this month's contaminated egg scare saw shares drop 0.3p to 24.3p after it said its insurer was disputing a claim over product withdrawal costs.

Finsbury, whose Cardiff-based Memory Lane cake business was caught up in the toxic egg fears, saw retailers pull some of its products from shelves but with no risk to public health found its insurer is challenging its claim for costs.

The pound was up against the dollar, at 1.60, as traders were prepared to blame the retail figures on the impact of the snow. But sterling was down against the euro, at 1.18, after the single currency was buoyed by the strongest German business confidence survey for 20 years.

The biggest Footsie risers were Royal Bank of Scotland up 2.8p at 44.9p, Autonomy ahead 56p at 1480p, Weir Group up 36p at 1653p and African Barrick Gold ahead 11p at 529p.

The biggest Footsie fallers were Man Group down 12.1p at 282p, Standard Chartered off 34p at 1673p, Burberry down 14p at 1031p and British Land off 7p at 516.5p

14.35: We have an update on Royal Bank of Scotland, which is topping the FTSE 100 riser board on reports it might seek an early exit from the Government's toxic asset insurance scheme.

The shares are up 7%, or 2.93p, at 45.12p.

The Dow Jones has opened up 63 points at 11,885.8. US investors are mulling Bank of America earnings that missed forecasts, and General Electric and Google results that came in ahead of expectations.

The Footsie is trading up 40.7 points at 5,908.6.

12.50:

A lunchtime update - the FTSE 100 is 35.1 points better off at 5903.01.

Miners, boosted by marginally improved metal prices, have made gains today, with Anglo-Swiss group Xstrata up 23p at 1411.5p, platinum miner Lonmin ahead 27p at 1771p and copper and zinc firm Vedanta Resources advancing 37p to 2409p.

Investors seem to have shrugged off official figures from the Office for National Statistics, which revealed retail sales volumes declined 0.8% last month - the worst December on record.

10.50:

The picture has improved for shares this morning, with the FTSE 100 now 47.78 points higher at 5915.69.

Better results from Morgan Stanley overnight improved sentiment in the US, and global markets have responded. However, the futures markets are predicting a flat opening for the Dow Jones later today.

09.30:

The FTSE 100 struggled to stage a fightback today after a 3% fall over the previous two sessions, with RBS rising and National Grid lower.

The Footsie was 12.11 points higher at 5880.02 in early trading.

A resilient session on Wall Street following a jump in profits at Morgan Stanley meant the top flight lifted 26.1 points to 5893.9, after falling 2% on Thursday amid fears that China will have to cool economic growth.

Those worries continued to hamper Asian markets as the Nikkei 225 in Tokyo fell more than 1% and Hong Kong's Hang Seng index also dropped.

Banks set the pace in London after Morgan Stanley's 80% rise in fourth quarter profits and as the Financial Times reported that Royal Bank of Scotland and Treasury officials were examining ways in which the bank could secure an early exit from the government's asset protection scheme.

RBS jumped 5% or 2.1p to 44.3p, while fellow part-nationalised bank Lloyds Banking Group added 1.4p to 68.2p and Barclays improved 1.1p to 304.35p.

National Grid was one of the leading fallers, down 7p to 532p after New York regulators granted a smaller-than-requested rate increase in the state.

Outside the top flight, shares in outsourcer Mouchel jumped 19% or 21.25p to 135p after construction firm Costain revealed a third takeover proposal worth more than £170m.

And luxury goods group Mulberry continued its run of form, rising 59p to 1309p after forecasting profits ahead of market expectations. Sterling slipped to a two-week low against the euro on Friday as the single currency rallied and investors awaited a reading of UK retail sales later in the day.

Euro gains helped to support the pound against the dollar, but sterling was still down from an eight-week high hit earlier in the week, as some investors tempered speculation that higher UK inflation will prompt a rise in interest rates within months.

Higher-than-forecast UK inflation data drove the pound up earlier this week as investors brought forward expectations for a first Bank of England hike to as early as May.

In early trade, the pound rose 0.2% on the day to $1.5935. Earlier in the week, it rallied to $1.6060, its strongest since late November, and is poised to end the week 0.5% higher against the dollar.

The euro gained 0.4% to 85.13p against the pound, its strongest since January 5.

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