Banking stocks under FTSE pressure

Banking stocks came under further pressure on the London market today as Halifax Bank of Scotland revealed £1bn (€1.3bn) in writedowns and predicted a 9% fall in house prices.

Gains among energy-related firms and oil majors helped limit the impact on the wider FTSE 100 Index, which reversed earlier losses to stand 20.9 points higher at 5777.8 by mid-morning.

Today’s trading update from HBOS – issued as it scrambles to gain investor backing for its £4bn (€5bn) rights issue – hit the already embattled banking sector, with news of higher bad debts to come on a worsening outlook for house prices.

HBOS saw shares fall 4%, or 14p to 304.75p, despite reassurances that trading was satisfactory and in line with its expectations.

Beleaguered housebuilder Persimmon also suffered yet more falls after HBOS’s grim predictions for 2008 property prices, which marked a near doubling of recent forecasts for “mid-single digit” declines.

The Charles Church owner fell 10.5p to 369p, ahead of its imminent ejection from the FTSE 100 when a top flight reshuffle takes place tomorrow.

Alliance & Leicester was among the biggest fallers in the banking sector after the HBOS update, down 14.25p at 308.5p, with Barclays off 7.25p at 319p.

British Gas owner Centrica was providing support, nearly 3% ahead, up 7.5p at 313.25p after a brief update, which confirmed performance was in line with last month’s trading news.

Other energy stocks were also seeing gains, with Cairn Energy up 77p at 3299p and oil giant BP rising 9.25p to 589p.

Transport groups were also on the front foot after Go-Ahead in the second tier said full-year results were set to be ahead of its previous expectations.

The stock soared 16%, up 242p to 1765p, with sector counterpart Stagecoach also up 18.5p at 256.5p and in the top flight, FirstGroup rose 20p to 531.5p.

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