Banking shares continue FTSE rally

Banking shares continued their rally today after a City firm said fears of further nationalisations in the sector looked to be overdone.

Lloyds Banking Group shares jumped 37% or 25.1p to 92.2p as Citi also upgraded its rating on the new HBOS owner from hold to buy.

The FTSE 100 Index closed in negative territory last night due to economic fears, but this was reversed with the help of banks as the Footsie reached mid-morning 73.8 points higher at 4268.2.

Barclays gained for a third successive session, up 18% or 16p to 106p, after its open letter on Monday outlining its funding position calmed investor nerves. Royal Bank of Scotland was 1.9p higher at 17.6p.

Meanwhile an update from Standard Life, in which the insurer described its capital strength as robust, caused shares in the Edinburgh-based firm to rise 6% or 12.75p to 219.5p. Aviva added 30.25p to 323.5p and Prudential rose 27.25p to 339.75p.

In other corporate news, BSkyB shares jumped 9% or 41.75p to 476.5p after it reported a 31% rise in half-year profits and said it continued to see strong growth in new customer figures.

And shares in platinum specialist Johnson Matthey were up 6% or 56.5p to 981p after a trading update from the firm met analyst expectations.

There was a similar response to a statement from industrial components firm GKN, which said pre-tax profits were expected to be at the higher end of its previously announced range. Shares were 7.75p higher at 84.75p.

Britvic shares added 2% or 4p to 229p after the drinks firm said it continued to outperform the rest of the market. It reported total revenues of £218.6m (€235.7m) in the 12 weeks to December 21, an increase of 2.1% on the prior year.