Banking and oil stocks bad news for FTSE

Poor sentiment towards banking and oil stocks pushed London shares further into the red today.

The FTSE 100 Index compounded its earlier losses to stand 16.5 points down at 5315.8 by mid-morning.

Banks were having a bad time despite news of a 14% hike in half-year profits to £3.69bn (€5.3bn) at Royal Bank of Scotland.

Analysts said investors were concerned about the bank’s growth prospects, particularly in China.

RBS lost nearly 3% or 50p to 1653p and dragged the rest of the sector down, with Barclays the next biggest victim, dipping 7,5p to 554.5p.

The other sector having a major negative impact on the Footsie was oil and gas after yesterday’s better-than-expected US oil stockpile data.

The news sent BP tumbling by 5p to 638p while Royal Dutch Shell B shares were down 20p to 1844p and BG Group was off 0.75p at 489.5p.

The price of a barrel of US light crude had fallen by a dollar since yesterday, although it was 20 cents up at 61.06 in futures trading this morning.

Traders said the market had factored in a quarter point cut in interest rates by the Bank of England today, although there could be a reaction if the Bank keeps them on hold.

Amvescap joined the banks and oil majors in pulling the Footsie down after Canadian fund manager CI Financial withdrew its unsolicited offer for the investment group. Shares were at the top of the Footsie fallers, slipping nearly 8% or 32p to 384p.

ICI and consumer products group Unilever proved to be the biggest risers, gaining by more than 3% as the City picked up on signs of resilience in the face of tough conditions.

ICI was the strongest riser, up 20.25p to 290.5p, as it stuck by guidance for a satisfactory year and said it had experienced some improvement in trading towards the end of its second quarter.

Unilever followed it after posting lower profits, but saying it had stabilised market share. Shares were 19.5p higher at 570.5p.