Disappointing morning for FTSE

Banking shares remained out of favour on the London market today, despite a reassuring trading update from Barclays Capital.

The banking giant’s shares were 5% higher for a while after it revealed a better-than-feared £1.3 billion write-down amid the credit squeeze.

Even though the group put paid to rumours it was facing a £10 billion black hole, the stock later retreated in line with other banking stocks, leaving the FTSE 100 Index 57.2 points lower at 6374.9 by mid-morning.

It was a volatile session for the London market after initial expectations for a depressed opening were instead followed by a rise of 33 points.

That reflected relief at the news from Barclays, although the company’s shares were later barely changed with a rise of half a penny to 533.5p.

Royal Bank of Scotland bore the brunt of the latest banking sell-off, with its stock down 18.5p at 448.5p, a fall of 4%. HSBC dipped 8.5p to 857.5p, while Alliance & Leicester dropped 25.5p to 643.5p.

Northern Rock tested new record lows, down 9.2p to 130p, as traders positioned themselves for more bad news, ahead of Friday’s deadline for takeover bids. The City is expecting little value for shares once the process is completed.

Scottish & Newcastle provided some uplift after news its suitors Carlsberg and Heineken were upping their proposed offer to £7.3 billion. Shares in the brewer surged 22p to 762.5p.

Miner Antofagasta, too, made gains, up 18p to 763p after a broker upgrade from UBS.

But brewer SABMiller was on the back foot, off 49p at 1326p due largely to its cautious outlook that accompanied the group’s interim results.

Meanwhile, credit reference-checking group Experian saw a 14% fall, down 67.75p to 407p as the group also said it was in line for tough times ahead.

Bookmaker Ladbrokes was another heavy faller, diving 9% or 33.25p to 346.25p, after it reported a disappointing performance from its core betting shop business.