London Report: FTSE 100 ends flat after Lloyds’ drop weighs index down

SHARES in Lloyds plunged 4.9 per cent yesterday after the government sold a stake in the lender at a discount to its stock price, and held back the UK’s blue chip equity index.

The FTSE 100 index, which at one stage rose as much as 0.6 per cent, ended up by just 0.41 points, flat in percentage terms, at 6,605.30 points.

The weakness at Lloyds, after the government sold a £4.2bn stake in the bank at a 4.6 per cent discount to Lloyds’ closing share price on Tuesday, took the most points off the FTSE 100.

Simon Gergel of Allianz Global Investors said Lloyds’ growth potential looked weak compared to rival HSBC, which is more exposed to fast-growing Asian economies.

“The growth prospects for Lloyds in the UK are limited as the economy is mature and we believe that low interest rates and high levels of consumer and government debt will restrain economic growth and the demand for further credit,” said Gergel.

The FTSE has fallen below its 50-day moving average which stands at around 6,637 points.