FTSE close: Lloyds up; RBS, Rolls-Royce down

 

The FTSE 100 recovered its poise this afternoon after falling through the 5,000 level for the first time in a month.

The sign and logo of the London Stock Exchange

Lloyds Banking Group spent much of the session in positive territory after investors digested news of a £13.5bn rights issue and improving conditions for bad debts.

But Royal Bank of Scotland declined 10% as it was confirmed the Government will raise its stake, while weak results from Swiss bank UBS further dented the sector.

The wider market was dragged lower by a weak session in Asia and a poor session for miners after the US dollar gained strength. The Footsie closed 60 points lower at 5,044.5, having fallen as low as 4,985 earlier in the session.

On Wall Street, the Dow Jones was 54.6 points lower at 9,734.8 at the London close.

Eurasian Natural Resources led the list of fallers in the mining sector, dropping 28p to 851p.

Lloyds was one of a handful of blue-chips in positive territory - up 2.33p to 87.33p - as investors welcomed its £21bn fundraising plan and intention to escape the Government's asset protection scheme.

But RBS lagged 2.72p at 35.93p after the Government confirmed plans to pump in an additional £25.5bn and increase its stake in the bank to 84% as a result of the toxic debts scheme.

Other banks were also under pressure, with HSBC off 22.5p at 667.5p and Asian-facing Standard Chartered down 28p to 1495p. Barclays slid 6.55p to 323.45p as it also announced details of a major restructuring to its management team.

Defence and engineering giant Rolls-Royce was another heavy faller, losing 8.6p to 443.1p despite a steady-as-she-goes trading update in line with previous guidance. But chief executive Sir John Rose warned there was 'no evidence yet of a sustained and general return to growth' across its markets.

The biggest rise in the FTSE 250 index came from budget stores group Dunelm after it said like-for-like sales continued to run ahead of market expectations. The trading update prompted Numis Securities to raise its rating from add to buy and caused shares to jump 6.38% or 20.8p to 346.8p.

The retail stock stood at 120p at the start of this year.

Meanwhile, AB Foods slipped 12.5p to 820.5p after it announced full-year results showing profits ahead by 4% to £655m.

Analysts said the results from the Primark owner were in line with expectations, although cautious comments from the company resulted in some pressure on the stock.

Shares in Weir Group fell 23.5p to 671.5p despite the pump manufacturer saying full-year profit will come in at the upper end of market expectations.

'Some of the bulls were probably expecting better news,' says Arbuthnot analyst Michael Blogg.

Shares in ATH Resources rose 1p to 51.25p, after the British mining firm secured a new credit facility, prompting Evolution Securities to upgrade its rating to 'add' from 'neutral'.

ATH Resources said it has secured a three-year £30m credit facility with HSBC and Yorkshire Bank.

'Debt refinancing is good news for the group as it removes some of the market's concerns about how it will fund future growth,' said the broker in a note.

TOMORROW IN THE CITY

• Next and Marks & Spencer update the market.

• JD Wetherspoon is tipped to give good news to shareholders when it issues a first-quarter update tomorrow.

• Analysts are forecasting a 38% plunge in interim pre-tax profits at Firstgroup, the owner rail operator of First great Western.