Barclays drags down FTSE

The London market failed to hold on to initial gains today, despite a boost from blue-chip banks in the wake of interim results from Barclays.

The London market failed to hold on to initial gains today, despite a boost from blue-chip banks in the wake of interim results from Barclays.

A poor start to trading on Wall Street drove the FTSE 100 Index into the red after US unemployment claims jumped to a six-year high.

London's top flight index had broken through the 5,500 barrier briefly earlier in the session, but closed down 8.6 points at 5477.5.

The Bank of England's widely expected decision to maintain interest rates at 5% provided little direction, while wider progress was held back by some losses for the big insurers after disappointing results from Germany's Allianz.

Banks had accounted for much of the initial gains after half-year profits from heavyweight firm Barclays came in at the top end of expectations.

The group's 33% drop in profits was within estimates, with £2bn (€2.5bn) of credit crunch writedowns also containing no surprises.

Barclays shares rose 2% as a result, up 6p to 375p, with rival Lloyds TSB also enjoying an 4.5p gain to 318.75p. Halifax Bank of Scotland cheered 1.75p to 334.75p.

Royal Bank of Scotland was not doing so well as investors kept their powder dry ahead of the group's interims tomorrow. Shares closed down 1.25 to 233p.

Friends Provident shed 5%, or 4.5p to 87.2p, after half-year profits fell 20% and it failed to announce any disposals as part of its overhaul.

General insurer RSA also fell despite beating expectations with its half-year figures, with shares down 0.3p at 138.9p.

Standard Life and Legal & General bucked the trend, up 4.75p at 248p and 3.2p at 110.8p respectively.

Medical devices firm Smith & Nephew was near the top of the risers board after beating forecasts with its second quarter results.

Shares jumped more than 5%, or 29.5p to 597p. It was pipped to the top spot by metals producer Eurasian Natural Resources which consolidated gains yesterday seen after strong ore production figures. The group's shares were up 10%, or 100p to 1117p.

International Power was among the top share fallers after it said its second half performance would be impacted by an extended outage at its Rugeley coal-fired power station. Shares were down 14p at 407p, despite a 19% rise in half-year profits.

Elsewhere, oil prices creeping back up around the US$120 a barrel level saw British Airways shares slip 13p to 255p. Low-cost carrier easyJet also saw its stock fall 8p to 338p.

Retailers were off across the board, with supermarket declines led by Sainsbury's, down 10.25p at 341p, and B&Q parent Kingfisher also down 3.6p at 131.2p.

In the FTSE 250, department store chain Debenhams dropped 1p to 56.5p as yesterday's talk of an offer from Iceland's Baugur faded.

The biggest share risers were Eurasian Natural Resources up 100p at 1117p, Smith & Nephew ahead 29.5p at 597p, G4S up 9.1p at 205p and Antofagasta up 24p at 566.5p.

The biggest Footsie fallers were Liberty International down 48.5p at 851.5p, Friends Provident off 4.5p at 87.2p, British Airways down 13p at 255p and Carnival down 84p at 1850p.

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