Blue chip banks suffered heavy losses on the London market today as fresh fears over Barclays’ balance sheet put the sector under pressure.
Barclays said it was still considering fundraising options – such as tapping shareholders for cash – as it unveiled a £1bn (€1.3bn) first quarter write-down due to credit market difficulties.
The news – which came just a day after Bradford & Bingley’s shock £300m (€378m) cash call – hit the sector hard, but the wider FTSE 100 Index shrugged off the bank woes to close up 35.8 points at 6251.8.
A choppy early session on Wall Street saw the Dow Jones Industrial Average swing between positive and negative territory as US Federal Reserve chairman Ben Bernanke gave a speech at a banking conference in the US. A brief rally lent support to the Footsie in the closing hour.
Royal Bank of Scotland was the Footsie’s biggest faller with a 14% fall, or 43.25p, to 276p after its shares began trading without the rights to new stock offered by the bank in its cash call last month.
Even though Barclays made no mention of its own rights issue, the fact that first quarter profits were lower than last year dampened the mood. Shares in the bank fell 2%, or 8.5p to 418.75p.
Britain’s biggest mortgage lender Halifax Bank of Scotland was 5p lower at 465.25p, while Alliance & Leicester fell 6p to 439.75p.
Among the Footsie’s risers, Cadbury jumped 4%, or 25p to 672p, after it said sales growth had been stronger than expected in the first half of its financial year. Brewing firm SABMiller followed with a gain of 47p to 1250p, after a 15% rise in adjusted full-year profits exceeded market expectations.
BT was the top performer after the former monopoly revealed a 3% rise in annual underlying profits to £5.78bn (€7.3bn). Departing chief executive Ben Verwaayen said he was bowing out on a high, and shares were more than 5% up, or 12p, to 235.25p.
Cairn Energy was another leading riser after an upgrade from UBS lifted the stock 4%, or 144p, to 3532p.
In the FTSE 250 Index, investors were underwhelmed by plans to revive Currys owner DSG International through cost cutting and closing stores. Shares in the company were 8% lower, or 5.25p, at 64p.
WH Smith was not far behind, down 15.25p to 402.25p, after Citi downgraded the retailer to a hold and said it was concerned about the lack of near-term trading catalysts.
ITV was also on the back foot despite executive chairman Michael Grade telling investors that a turnaround plan was on track, with net ad revenues up 2% in the first three months of the year. Shares in the broadcaster dipped 1p to 61.9p.
The biggest Footsie risers were BT up 12p at 235.25p, Icap ahead 28.5p at 635p, Cairn Energy up 144p at 3532p and SABMiller up 47p at 1250p.
The biggest Footsie fallers were Royal Bank of Scotland down 43.25p at 276p, Thomas Cook down 13.75p at 255.75p, Sage off 5p at 220p and Barclays down 8.5p at 418.75p.