Banks show improvement on FTSE

Shares in Barclays and Lloyds Banking Group jumped by more than 7% today as sentiment in the sector continued to show signs of improvement.

Barclays was boosted by reports the Financial Services Authority is close to giving the bank the all-clear after a rigorous stress test of its loan book.

The speculation helped Barclays shares to jump 8% or 11.3p to 151.4p, fuelling gains across the rest of the sector although the FTSE 100 Index lost an initial rise to stand 8 points lower at 3917.1 by mid-morning.

Lloyds Banking Group rose 5.7p to 74.7p, a gain of 8%, while Royal Bank of Scotland added 0.1p to 26.7p and HSBC lifted 2p to 401.25p.

The FTSE risers board also featured construction firm Balfour Beatty, up 3% or 9.5p to 337.5p after Morgan Stanley upgraded its rating on the stock.

The banking gains were offset by weaker mining firms as Lonmin dropped 77p to 1416p and Eurasian Natural Resources shed 25.25p to 454.75p.

Retailers were under pressure for a second successive session, led by Marks & Spencer as investors braced themselves for another gloomy update from the chain. Shares were down 4.75p to 264p ahead of Tuesday’ report, while Next fell 22p to 1252p and Sainsbury’s drifted 5.75p to 315.25p.

On a quiet day for corporate news, Dairy Crest shares jumped 13% after the FTSE 250 Index firm reported strong sales figures for its Country Life and Clover butter and spreads division. With the company also improving its debt position through the sale of a 49% stake in Yoplait Dairy Crest, shares rose 32p to 256.5p, a jump of 14%.

Fellow dairies firm Robert Wiseman failed to benefit from the positive sentiment in the sector, with shares down 3.5p at 334p.