Banks pull London market up to strong gains

Banks stormed ahead in trading today pulling the London market up to strong gains.

Banks stormed ahead in trading today pulling the London market up to strong gains.

Investors also cheered as they awaited details of the multi-billion US package to revive the economy, helping the FTSE 100 Index close up 100.8 points at 4295.2.

In the US markets were also up, with the Dow Jones Industrial Average rising 1.8% in early trading to around 8322, as investors looked to Wednesday’s expected vote by US politicians on an $825bn (€621bn) stimulus bill.

The Footsie closed in negative territory on Tuesday night due to economic fears, but this was reversed today with the help of the banks.

Lloyds Banking Group shares jumped 50% or 33.8p to 100.9p today after Citi upgraded its rating on the new HBOS owner from hold to buy and said recent nationalisation fears looked to have been overdone.

Among other banks, Barclays gained for a third successive session, up 19% or 17p to 107p, after its open letter on Monday outlining its funding position calmed investor nerves. Royal Bank of Scotland rose 36%, or 5.6p to 21.3p and HSBC was 51.75p higher at 583p.

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 almost 8% or 16.25p to 223p.

That was despite UK life and pensions new business falling by a quarter to £2.38bn (€2.57bn) in the final three months of 2008.

Legal & General, which will post figures tomorrow, rose 11% or 6.4p to 67.3p, while Aviva added 39.75p to 333p.

Property giant British Land added 9% after reports that it planned to sell a 50% share of Meadowhall in Sheffield for around £550m (€594m). Shares rose 37.75p to 468.75p.

In other corporate news, BSkyB shares jumped 13% or 55.25p to 490p 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 8% or 76.5p to 1001p, 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 9.75p higher at 86.75p.

GKN was joined on the FTSE 250 risers board by pubs chain Greene King, which said like-for-like sales in its retail arm grew by 2.4% over Christmas and New Year. Shares were up 69.25p to 421p.

Britvic shares added 7% or 15p to 240p after the drinks firm said it continued to outperform the rest of the market. It reported total revenues of £218.6m (€236m) in the 12 weeks to December 21, an increase of 2.1% on the prior year.

The biggest Footsie risers were Lloyds Banking Group up 33.8p at 100.9p, Royal Bank of Scotland up 5.6p at 21.3p, Barclays up 17p at 107p and Prudential up 42.75p at 355.25p.

The biggest Footsie fallers were Xstrata down 62p at 623p, Tate & Lyle down 8.5p at 344p, Reckitt Benckiser, off 58p at 2733 and Vedanta Resources down 10p at 595p

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