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FTSE steady despite volatile banks

Pa
Monday 19 January 2009 13:37 GMT
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Banking shares sustained more heavy losses despite the Government's latest efforts to get the sector lending again.

Royal Bank of Scotland took the heaviest hit - down by 36% or 12.7p to 22p - after it revealed it could make UK record losses of up to £28 billion.

The level of write-downs, mainly relating to its acquisition of ABN Amro, spooked other shares in the sector, although the FTSE 100 Index held steady to reach mid-morning 75.1 points higher at 4222.2.

Barclays was the only bank riser, but this was limited to a small slice of the 25% slump it suffered during a dramatic final hour of trading on Friday.

The recovery was helped by an after-hours statement on Friday in which the bank said it expected to beat market forecasts for 2008 results. Shares initially rose 20% but were later 5% or 4.7p higher at 102.7p.

Lloyds Banking Group also issued a reassuring trading update on its first day of trading following the merger of HBOS and Lloyds TSB. Shares opened higher, but later retreated on fears that it will suffer the same fate as RBS and sustain heavy write-downs. Lloyds was later 10% or 10.5p lower at 87.9p.

HSBC issued a statement insisting that it did not need government help, but shares still fell 3% or 16.25p to 519.25p.

On the corporate reporting front, shares in online fashion retailer ASOS were down 8% or 22.75p to 256.75p. It delivered an upbeat Christmas trading statement, with sales up 118% in the nine weeks to last weekend, but this was offset by its comment that margins had been impacted by promotional activity.

Premier Foods shares rose 5%, or 1.75p to 342.5p, after it signalled the potential sale of French bakery operations in a move set to reduce its debt mountain.

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