Banks suffer as concerns over their Greek exposure weigh

BRITAIN’S top share index closed 0.6 per cent higher on Thursday, as gains in commodities outpaced falls in banks, which remained mired in uncertainty over Eurozone’s plans to deal with Greece’s debt problems.

BT Group slumped 8.8 per cent, topping the losers’s list on the FTSE 100 and hitting a more than six-month low after a looming and potentially lengthy row over pensions overshadowed solid third-quarter results.

The FTSE 100 ended up 29.49 points at 5,161.48, its fourth consecutive day of gains, albeit in choppy trade and drifting back from an early session peak of 5,201.82, as investors awaited the fine print of the Greece bailout plans.

“The confusion over the bailout is leaving traders a little nervous. Its seems now that the EU has made a decision to help Greece, but just what that help entails is still a mystery,” said Jimmy Yates, head of equities at CMC Markets.

Earlier European Union President Herman Van Rompuy said the euro zone will take coordinated action if necessary to safeguard the financial stability of the single currency area.

Banks were weighed as investors continued to speculate over their potential exposure to Greece’s debts and what measures might be taken to resolve it.

Lloyds Banking Group, Royal Bank of Scotland, Barclays, HSBC and Standard Chartered shed 0.2 to 3.7 per cent.

There was better news for the oil majors, which have been laggards of the recent rally, and rebounding after Wednesday’s falls as the price of crude steadied at around $75 a barrel.

BP, BG Group and Royal Dutch Shell advanced 0.9 to 2.5 per cent.
Miners also recovered from a late dip in the previous session as metal prices bounced back across the board after data showed a surge in employment in Australia and stronger-than-expected bank lending in China.

Fresnillo, Xstrata, Vedanta Resources, BHP Billiton, Anglo American and Antofagasta gained 0.9 to 2.9 per cent.

Rio Tinto, up 2.4 per cent, reported above-forecast second-half profits of $3.73bn, beating analysts’ forecasts of around $3.08bn.

Engines maker Rolls-Royce topped the FTSE gainers’ list, up 6.5 per cent after it posted a 4 per cent rise in full-year profit and said its 2010 performance would be similar to 2009.

Smith & Nephew gained 4.3 per cent after Europe’s leading maker of replacement hips and knees met expectations with a 22 per cent rise in fourth-quarter earnings, and said its markets had stabilised in the second half.

Drinks firm Diageo shed 0.7 per cent as the maker of Smirnoff vodka and Guinness beer posted underlying earnings for the half year to end-December of 44.2 pence a share, below a consensus figure of 46.2 pence.

Insurers were mixed but Aviva rose 1.5 per cent as market talk continued to boost hopes of a possible break-up bid for the firm.