Barclays recovery drives FTSE into positive territory

Barclays led a recovery for banking stocks today despite a nervous London market.

The banking giant’s positive trading update drove it to the top of the FTSE 100 Index risers board and gave the financial sector a lift.

But heavy overnight losses on Wall Street meant the Footsie struggled to make headway, standing 1.4 points lower at 6179.1 by mid-morning.

The US losses came after Citigroup warned markets of further cost-cutting drives, although a brighter start is expected today after the bank announced a 7.5 billion US dollar investment (£3.6bn) from the Abu Dhabi Investment Authority.

In London, Barclays’ shares rose more than 4%, or 21.5p to 518.5p, as the company said it would meet profit expectations, offsetting concerns about the impact of turmoil in financial markets.

Encouragingly for other banking stocks, Barclays said it had not seen a deterioration in the amount of money set aside for bad debts.

Royal Bank of Scotland rose 7.5p to 420.5p and Halifax Bank of Scotland added 17p to 759.5p. Crisis-hit Northern Rock rallied a further 4.9p to 115p after the mortgage lender’s biggest shareholder called for a bigger offer than the one on the table from a Virgin-led consortium.

Among the fallers, housebuilders suffered more jitters over prospects for the market next year with Persimmon down 14p at 756p and Barratt Developments 10.25p lower at 446.5p. Taylor Wimpey was 4.4p off at 193.7p.

But water company Severn Trent rose on strong corporate news after half-year underlying profits of £161.5 million came in ahead of market expectations. Shares responded with a rise of 47p to 1509p.

In the second tier, support services firm WS Atkins saw shares reach an 11-year high today as higher margins helped it to a 46% rise in half-year profits. The stock rose 4%, or 46p, to 1211p.

Banknote printing firm De La Rue was another riser on good numbers and a strategic review of the business which may lead to disposals. Shares rose 36p to 817p.