FTSE closes flat as Monday’s zeal for banks wanes and energy firms recover

BRITAIN’S top shares ended steady yesterday as strength in oils offset falls in banks following weaker-than-expected US data that stoked concern about the strength of the economic rebound.

The FTSE 100 closed down 0.63 point at 5,396.48 following a 2.7 per cent gain on Monday to a three-month closing high.

“Weak US data in the afternoon has not helped sentiment as we have seen again the FTSE fail to finish above the psychologically important 5,400 level,” said Jimmy Yates, head of equities at CMC Markets.

Light volumes accentuated share price moves as investors took off on their summer holidays, with the FTSE 100 trading at just 70 per cent of its 90-day average volume.

Banking stocks, which rallied on Monday after forecast-beating results from HSBC, were the biggest drag on the blue-chip index.

HSBC, which gained 5.3 per cent on Monday, lost 1.3 per cent after RBS cut its recommendation to “hold” from “buy”, saying it expects pre-impairment profit growth and margins to struggle until US rates rise.

Barclays fell 0.4 per cent ahead of its results on Thursday.

Standard Chartered, however, bucked the sector trend, rising 2.2 per cent ahead of first-half results today.

Energy firms were the main support, rallying along with US crude oil futures. BP added 0.6 percent as it tested equipment to permanently plug its Gulf of Mexico oil well.

Chipmaker Arm Holdings, which had surged to more than eight-year highs following strong results and after signing a deal with Microsoft, fell 6 per cent.

Centrica was the top performer on the FTSE 100, up 3.6 per cent as Goldman Sachs lifted its earnings forecast on the gas supplier.