Taxpayer support for banks helps FTSE gain

Ailing banks RBS and Lloyds led gains for the FTSE 100 Index today as the Government unveiled plans to insure toxic debts worth hundreds of billions.

The duo both posted gains of more than 20% as investors reacted positively to the extra support from the taxpayer. The Footsie lost some of its early impetus but was still 31.7 points higher at 3880.7 by mid-morning.

RBS – putting £325 billion of assets into the scheme – jumped 24% or 5.5p to 28.6p despite record UK corporate losses of £24.1 billion after a disastrous year.

Lloyds, which confirmed its own talks over participation, soared 28% or 15.8p to 73.2p ahead of its own full-year results tomorrow.

Elsewhere in the banking sector, Barclays cheered 9.5p to 115.1p and HSBC gained 27.75p to 520.25p.

On a busy day for corporate results, RSA Insurance rallied in the wake of figures showing a 3% fall in full-year net profits. With the general insurer also cutting costs, shares were 10% higher, up 12.6p at 138.6p.

Other insurance firms were also well-represented on the Footsie risers board. Legal & General added 5.5p to 40.4p, Prudential cheered 23p to 290.75p and Aviva was 17p up at 304.5p. Old Mutual was 2.7p better off at 43.3p.

Centrica shares added 1.75p to 260p after announcing operating profits of £1.94 billion, a figure which included a surplus of £379 million from its residential arm.

Other gainers included fashion chain Next, which was upgraded by HSBC today and rose 37p to 1180p. Rival Marks & Spencer also added 7.75p to 259.5p despite being marked down by the same broker.

Outsourcing giant Capita was a prominent faller, down 4% or 26p to 647.5p despite a 16% rise in underlying profits and an upbeat outlook.