RBS spearheads banks’ rally on FTSE
The FTSE staged a rally this morning spearheaded by banks as investors gave a positive reaction to RBS results.
Markets yesterday had been dented by surging oil prices which triggered fears that world global growth could be hampered while data in the Eurozone suggested that the bloc could lurch into recession.
Banking stocks jumped in early trading despite RBS reporting a loss of £1.8bn – dragged down by exposure to Greek dent and generally tough trading.
But RBS was the biggest gainer on the FTSE 100, up 4.7 per cent. Investors were apparently impressed by the bank’s commitment to cutting costs, including salaries, to get the lender back on track.
Seymour Pierce analyst Bruce Packard said: “We continue to believe that RBS core retail and commercial bank is worth at least 40 pence per share, which gives enough upside to justify our buy recommendation.”
In contrast in the Eurozone, France’s Credit Agricole reported record losses and saw its share price fall by more than two per cent.
Lloyds nudged up by 3.6 per cent and Barclays three per cent as the sector was buoyant on London’s blue chip index.
Other significant risers were outsourcer Capita, up 3.3 per cent, after reporting a strong order book. Gold miner Randgold Resources fell 2.9 per cent.
British Gas owner Centrica lifted by 1.2 per cent after reporting a slim rise in profits and having announced that it is buying North Sea assets form French oil major total.
On the down side insure RSA dipped by 3.4 per cent while brokerHargreaves Lansdown was off by 1.5 per cent.
BA owner International Airlines Group edged down by 1.4 per cent while BAE Systems was off by 1.2 per cent.
British American Tobacco edged down by 0.6 per cent after announcing a £1.25bn share buy back.
In Asia the Nikkei closed up 0.4 per cent and the Hang Seng down 0.7 per cent.
Across the Atlantic later US weekly initial jobless claims numbers are due for release.