The London market’s six-day winning streak came to an end today as Royal Bank of Scotland led blue-chip shares lower.
Rumours over a potential cash call by part-nationalised RBS to keep the taxpayer’s stake at 70% when it insures toxic assets with the Government sent shares down more than 5% or 2.9p to 53.4p.
The wider FTSE 100 Index was down 38.5 points to 5134.4 by the close as heavyweight mining firms had a poor day, although the top-flight bounced back from session lows.
US markets offered little support despite more positive economic signs, with traders keen to take some money off the table after strong recent gains.
IG Index’s chief market strategist David Jones said: “Markets have suffered an inevitable pull-back today as investors book profits and take a step back to re-evaluate the economic landscape.”
Historical trends also suggest that the UK stock market could be due for a dip this week.
Stock market historian David Schwartz said that since 1993 the FTSE 100 has fallen between September 20 and 25 in 14 different years versus just two advances. One of the two gains was a marginal 0.1% rise in 1998.
In London, Lloyds Banking Group followed RBS lower – losing nearly 3% or 3.05p to 107.6p after disclosing on Friday that it was looking at possible alternatives to the Government’s asset protection scheme.
The Footsie’s two other banks, HSBC and Barclays, shed 8.4p to 721.6p and 3.65p to 370p respectively.
In a quiet session for corporate news, broker comments determined a number of the major moves in the top flight.
Mining stocks Kazakhmys and Vedanta Resources fell 37p to 1087p and 70p to 1940p after being downgraded. Weaker metals prices depressed the sector and even a positive note from Goldman Sachs on Antofagasta failed to prevent the firm shedding half a penny to 765.5p.
Cable & Wireless dipped 2.5p to 147.8p after broker ING downgraded the telecoms group from buy to hold due to continued pressure in the Caribbean and Panama.
More broker comments meanwhile pushed Marks & Spencer to the top of the leader board, with Societe Generale lifting its price target on hopes for better than expected sales. M&S added 5.9p to 374.4p.
Other retailers gaining ground included B&Q owner Kingfisher – 1.5p better at 213.2p after UBS upped its target price and said the DIY market had declined less than expected following improved first-half figures.
AstraZeneca gained 19p to 2799p in a good session for the pharmaceutical firms after signing a new drug development deal. Sector peers GlaxoSmithKline and Shire added 9p to 1209.5p and 3p to 267.9p respectively.
The biggest Footsie risers were M&S up 7p to 247.5p, Scottish & Southern Energy up 5.9p at 374.4p, TUI Travel ahead 3.2p to 269p and Smith & Nephew, up 6.5p to 566p.
The biggest Footsie fallers were RBS down 2.9p at 53.4p, Wolseley off 59p at 1428p, Fresnillo off 28.5p at 753.5p and Xstrata down 35p at 930p.