FTSE in red despite bank rally

The FTSE 100 stayed in the red today despite the continued rally in bank shares.

Barclays kept all of the 72% rise seen after Monday’s open letter to the stock market, outlining its funding position, boosted investor confidence in the sector as a whole.

But the positive mood did not spread to the rest of the market as the latest round of job losses and poor US retail data fuelled economic worries. The FTSE 100 Index finished down 14.6 points at 4194.4.

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

Barclays added 1.5% today, rising 1.3p to 90p, while Royal Bank of Scotland and Lloyds Banking Group both continued their ascent – increasing 8.3% and 2.9% respectively.

Friends Provident was another of the session’s big risers, up 11%, after the insurer said its required capital “buffer” stood at £850m (€914m) at the end of last year and could withstand a further 30% fall in equity markets.

Friends was up 8.1p to 81.5p as investors accepted a 27% fall in UK life and pensions sales last year. Elsewhere in the sector, Aviva shares retreated 8p to 293.25p, a fall of 2.7%, and Prudential dropped 5.75p to 312.5p.

A slide in the price of crude dragged associated shares downwards, as oil majors Royal Dutch Shell and BP lost ground. Royal Dutch Shell fell 0.9%, off 17p to 1705p, while BP dropped 0.1%, down 0.75p to 508.75p.

Miners also saw losses, with Xstrata down 4.9%, or 35.5p to 685p, and Astrazeneca was off 3.7%, or 115p to 2832p.

Building supplies firm Wolseley was the biggest faller in the FTSE 100 Index for the second successive session – this time down by 21p to 180p after its warning on Monday of a further increase in net debt to £3bn (€3.2bn).

Severn Trent was 3% lower – off 41p at 1146p – after it said annual revenues would be impacted by up to £25 million because of a decline in water consumption among metered customers.

Outside the top flight, shares in model railway group Hornby tumbled after it warned full-year results were likely to be towards the bottom end of market expectations. The stock fell 19.5p to 76.5p as the Scalextric firm also said the weakness of sterling was adding to pressure on costs.

The biggest rise in the FTSE 250 Index came from Enterprise Inns, which continued to fluctuate following a series of trading updates in the sector. The stock, up 6p to 42.5p, was helped by speculation of a possible freeze in beer duty.

The biggest Footsie risers were Friends Provident up 8.1p at 81.5p, Royal Bank of Scotland, up 1.2p at 15.7p, Eurasian Natural Resources, rose 18.5p to 338.75p and Experian was up 17.5p at 419.5p.

The biggest Footsie fallers were Wolseley, down 21p at 180p, 3I Group, off 13.5p at 254.75p, Whitbread, down 34p at 812p and Astrazeneca, off 115p at 2832p.