Gloom as Footsie falls below 4,000

Gains of more than 8% for battered Royal Bank of Scotland, Barclays and Lloyds failed to prevent the FTSE 100 Index from slipping below the 4,000 mark by 11.15am today.

The Footsie was down 8.3 points at 3998.5 by mid-morning as the market struggled for direction after a flat finish for America’s Dow Jones Industrial Average.

Asian markets were also near their opening marks, with a cautious response given to US President Barack Obama’s latest economic lifeline – a US$75bn (€59.1bn) package to help struggling homeowners.

In London, blue chip banks made strong gains, with RBS clawing back much of the double-digit loss seen yesterday on reports it may have to fork out £8bn (€9bn) to tap into the British Government’s toxic debt insurance scheme.

Shares in RBS rose 9% or 1.7p to 19.8p.

Lloyds added 4.1p to 54.9p, while Barclays joined in with a gain of 8p to 101.3p.

They were joined on the Footsie risers board by defence group BAE Systems after annual earnings of £1.9bn (€2.15bn) exceeded market expectations and the company said it was confident of further growth in 2009. Shares were up 9p at 395.25p.

B&Q owner Kingfisher flitted between positive and negative territory after reporting a 5.9% like-for-like quarterly sales decline at the DIY chain.

It was an improvement on the previous quarter, but Kingfisher said UK sales remained under pressure, sending shares down 3.4p to 128.4p.

The biggest fall in the top flight came from drinks can firm Rexam, which reported a 34% increase in full-year profits but offset this by revealing that trading weakened in the second half of the year.

Rexam shares were steady at first but later retreated to show a drop of almost 10%, down 30.75p at 278.75p.