The banking sector weighed on the London market today, led by Barclays after it agreed the terms of a merger with Dutch bank ABN Amro.
The stock was off nearly 2%, or 13p to 737p, as the agreed price came in above expectations and analysts questioned the cost savings estimated by the group.
The negative sentiment regarding the merger spilled into the rest of the market, with the FTSE 100 Index down 5.2 points at 6481.6 by mid-morning.
Royal Bank of Scotland was lower on the Barclays announcement, although many analysts speculate the consortium, which also includes Belgium’s Fortis and Spain’s Santander, will outbid Barclays after it has met with ABN. The stock was down 19p to 2008p.
Elsewhere in the sector, HBOS fell 7p to 1066p, Lloyds TSB slipped 0.5p to 582.5p and HSBC was down 4p to 925.5p.
Moving in the opposite direction, Scottish & Newcastle topped the risers’ board amid renewed takeover speculation after a report said drink giants SABMiller and Diageo held discussions regarding a move for the brewer. Shares were up more than 4%, or 26p to 597.5p.
Pharmaceuticals firm AstraZeneca fell 49p to 2904p amid concerns over the price it paid for American firm MedImmune, despite a solid set of first quarter results and news the acquisition would significantly boost its product pipeline.
Meanwhile, pubs and leisure group Whitbread was ahead 11p at 1911p prior to its annual results tomorrow, which are set to hit the top end of expectations.
In the second tier, construction group Alfred McAlpine fell more than 1%, or 5.5p to 498.25p, after it concluded its fraud investigation at its slate business and said the financial impact would be £22.9 million.
Bookmakers Ladbrokes gained 4.75p to 408.25p after it announced it had called off talks regarding a deal with 888 Holdings. Share in 888 slumped almost 6%, or 7p to 115.5p.