WHEN chancellor Alistair Darling delivers his budget tomorrow afternoon, he is expected to confirm the government’s support for an international levy on banks. And as if the outlook couldn’t look more overcast for banks, Virgin has funding in place to buy a swathe of high street branches from RBS, which should increase the competition in the retail arena. Lloyds Banking Group might expect to post a profit for 2010 but the future for sector still remains difficult. The current IG Markets price on the UK banking sector index is 5,014.5-5,037.2.

But while the financial sector has been under pressure, defensive stock Imperial Tobacco had been in a fantastic trend channel for almost a year until about two weeks ago. It hit highs of 2,159p but then corrected 6 per cent. If historical price action is anything to go by, it would be worth a buy on the lower bound of the trend channel around 2,020p. Depending on how its interim results – due out today – are received by the market, it could well be worth a play with a target of around 2,150p. Spreadex is offering 2,047.9p-2,053.1p.

For those more risk averse traders out there, a pairs trade on Imperial with British American Tobacco (BAT) might be more suitable. BAT has outperformed Imperial by about 10 per cent over the past three months. Traders could therefore look to buy Imperial and sell British American Tobacco. IG Index offers 2,499.4p-2,524.6p.

Crude oil fell below $80 a barrel yesterday, hitting some of the oil- and gas-producing companies including Premier Oil, whose shares fell by 2 per cent to 1,163p. However, the firm is scheduled to submit a full-year report on Thursday, which analysts predict will be robust due to projects in Indonesia and Vietnam, so the stock could well recover later in the week. Spreadex has a
June-based contract with a spread of 1,173.0p-1,185.7p.

Gold prices fell to three-week lows yesterday, dropping to below $1,096 an ounce, due to the continuing uncertainty surrounding Greece’s debt problems, which in turn caused a strengthening in the dollar. Fears over a possible increase in interest rates in emerging countries in the wake of a hike in India also contributed to the fall. However, with many analysts believing gold will still rise in price in the long term, some spread betters are taking advantage of what they see as good buying levels. ShortsandLongs.com has a gold daily June spread of $1,097.2-$1,097.5.

Yesterday, building materials group Wolseley said it would remain cautious for the rest of the year and focus on controlling costs after seeing trading profit fall 34 per cent in the first half. But Wolseley is seen by some analysts as a classic recovery play and its shares have been rising since last June. Spreadex offers 1,584.4p-$1,588.6p.