LONDON (ShareCast) - Footsie has struggled all morning with downbeat banks and retailers leading the index lower and higher oil prices stoking the pessimism.

Barclays, HBOS and Royal Bank of Scotland are all showing meaty falls.

Consumer stocks are also under pressure with the Bank of England today issuing a gloomy assessment of the UK's prospects. The Bank expects little or no growth in the UK economy for the next two years, though inflation should peak at 5% it says.

Enterprise Inns, Marks & Spencer and Kingfisher are all well down.

The higher oil price is also weighing on sentiment, with fuel guzzling cruise operator Carnival a heavy faller.

Metal prices are also advancing, boosting miners such as Xstrata, Kazakhmys and Anglo American.

Friends Provident falls back after Merrill Lynch downgraded the insurer to ‘underperform’ from ‘neutral’ to reflect its stalling disposal programme.

Ex-dividends are also proving a drag while housebuilders have given back some of their recent gains led by Barratt and Taylor Wimpey.

Tour operator Thomas Cook is doing well after it said current trading continues to be strong. "Trading in the 08 summer season is strong in all markets and early indicators show that we are currently ahead of last year for Winter 08/09 and Summer 09. While we are encouraged by these early results, we are increasing our flexibility to give us the levers to pull in tougher market conditions, including fuel price hedging and capacity management in all our markets," chief executive Manny Fontenla-Novoa said.

Bid target British Energy's underlying profit nearly halved to £129m, from £253m, in its first quarter to June, blamed on lower output and higher costs incurred in respect of the BCU modifications. The group, which faces a takeover from French group EDF, added that its Heysham 1 Reactor 1 is close to a return to service.

Expectations of a poor economic environment in core markets prompted JP Morgan to lower its rating on electrical retailer DSG International to ‘underweight’ from ‘neutral’ sending its share price crashing.

Citigroup has raised its target price on Schroders to 875p from 770p following the fund manager’s first half results last week.

Software group Micro Focus says it achieved its targets for both organic revenue growth and EBITDA margins in the three months to July and reiterated its target this year of double digit organic revenue growth at constant currency at maintained margins. "We are encouraged by the progress made across the group in our first quarter of trading," chief executive Stephen Kelly said.

Aim-listed Kurawood has slumped on a warning it is in funding talks, though more positively the boom in performing arts interest among children has given Stagecoach Theatre a boost.

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