FTSE banking shares still on a high

The attempt by Barclays to reassure investors over its funding position continued to buoy its shares and others in the banking sector today.

Barclays kept all of the 72% rise seen after yesterday’s open letter to the stock market, while Royal Bank of Scotland added another 10% and Lloyds Banking Group rose more than 6% by mid-morning.

The positive mood in the banking sector did not spread to the rest of the market, with the FTSE 100 Index down 46.2 points at 4162.8 after the latest round of heavy job losses fuelled worries about economic prospects.

The FTSE gained nearly 4% yesterday after the letter from chief executive John Varley and chairman Marcus Agius sought to reassure investors that the bank was well-funded and profitable.

Barclays rose another 3% or 2.6p to 91.3p, while Royal Bank of Scotland improved 1.5p to 16p and Lloyds Banking Group lifted 4.3p to 69.5p.

Friends Provident was the biggest riser of the session, up 11%, after the insurer said its required capital “buffer” stood at £850 million at the end of last year and could withstand a further 30% fall in equity markets.

Friends was up 8.3p to 81.7p as investors accepted a 27% fall in UK life and pensions sales last year. Elsewhere in the sector, Aviva shares retreated 15.75p at 285.5p and Prudential fell 10p to 308.25p.