Blue chip banks made strong gains today as news that Bank of America will repay its $45bn (€30bn) US bailout cash outweighed reports of the sector’s heavy exposure to Dubai.
Part-nationalised Royal Bank of Scotland also shrugged off concerns that its board would resign amid a row with the Government over bonuses thanks to the sector boost from BoA’s surprise announcement.
But while the banks were striding ahead, the wider FTSE 100 Index failed to make headway today, closing down 14.4 points at 5313 as mining stocks provided a drag.
The Footsie had stood 45 points higher at one stage after Japan’s Nikkei index closed up 4% overnight, as exporters surged on speculation of further government action to keep the yen from strengthening too much.
But optimism was reined in by US economic reports revealing that service sector activity and retail sales unexpectedly shrank in November as consumers held back on purchases.
In London, banks took the spotlight after BoA’s move – relating to loans made in last year’s credit crisis – helped bolster confidence in the sector.
This offset a report suggesting that UK banks make up the biggest group of foreign creditors for debt-ridden Dubai World.
RBS lifted 1.58p to 35.13p, with Lloyds Banking Group following with a rise of 2.35p at 55.45p and Barclays adding 7p to 304.5p.
As well as the banks, British Airways climbed 3.8p to 206.2p as passenger figures for November showed its planes flew 75.9% full last month – an increase of 1.5% on the same month last year.
However, miners gave back recent gains, led by Xstrata down 44p to 1104p.
Among other top flight stocks, home improvement retailer Kingfisher rose nearly 1% after it revealed like-for-like sales were up 5.7% in the 13 weeks to October 31, driven by higher sales of “big ticket” items and improved DIY performance. Shares closed up 1.9p at 237.9p.
Outside the top flight, shares in brewer Marston’s were 4% higher, up 3.2p to 93.1p, as the company offset any disappointment over lower full-year profits by reporting an improved sales trend at its managed pubs in recent weeks.
Transport firm Go-Ahead was another stock on the front foot after it announced the disposal of its loss-making aviation services business. Shares were 42p higher at 1270p, even though it warned the move would result in a £20m (€22m) hit to results.
Property website Rightmove was the biggest faller in the FTSE 250 Index amid market rumours that Google was considering the launch of an online property portal. The fears sent shares 10% or 57.6p lower to 499.9p.
The biggest Footsie risers were Royal Bank of Scotland up 1.58p at 35.13p, Lloyds Banking Group up 2.35p at 55.45p, Legal & General ahead 3.1p at 78.8p and Barclays up 7p at 304.5p.
The biggest Footsie fallers were Xstrata down 44p at 1104p, Rio Tinto off 108.5p at 3183.5p, Tullow Oil down 39p at 1255p and Lonmin down 54p at 1857.