Banking shares rebounded today as investors bet that Royal Bank of Scotland and HBOS will complete their fundraising rights issues.
A note from broker Citi suggesting recent falls in RBS shares looked excessive also breathed some life into the beleaguered sector.
The wider market struggled for direction ahead of the monthly decision on interest rates, with the FTSE 100 Index down 8.2 points at 5961.9 by mid-morning. Analysts expected the Bank of England to leave rates at 5%, even though the Halifax weighed in with more gloomy house price data
The 2.4% decline in house prices in May was not enough to condemn Persimmon to another session on the back foot. It rose 12.25p to 467p, while second tier rival Barratt Developments added 5.5p to 149.25p after recent heavy falls.
Halifax Bank of Scotland topped the risers board amid hopes the group’s right issue will go to plan next month. Shares rose 15.25p to 355.75p, with RBS 3% or 7.5p stronger at 257p as investors awaited news tomorrow on take-up for the NatWest parent company’s cash call.
Bradford & Bingley, which has received a battering in recent days, rose 4.5p to 73.5p in the FTSE 250 Index.
Morrisons delivered one of the biggest falls in the top flight, declining 8.25p to 284p after first quarter sales growth of 7% came in weaker than the 9.5% seen over the Christmas period.
Investors moved into Tesco instead, with the grocery giant ahead 5p at 416.5p.
Elsewhere, airline shares British Airways and easyJet made headway after the price of oil continued to ease from last month’s record high. BA rose 2p to 245.5p, while easyJet added 11.75p to 326.5p.
Fellow retailer WH Smith lost hold of an initial gain after reporting steady third quarter trading figures. Shares were later 1.5p lower at 398p.