FTSE banking stocks gain ground

The London market surged ahead today as banking stocks gained ground and shares hit by swine flu fears clawed back losses.

Part-nationalised Royal Bank of Scotland and Lloyds Banking Group drew positive comments from HSBC brokers, while British Airways was up almost 5% after falling for two days.

The wider FTSE 100 Index was 43.5 points higher at 4139.9 by mid-morning, also helped by better than expected results from oil major Royal Dutch Shell.

RBS and Lloyds found favour today after brokers said their participation in a taxpayer-backed insurance scheme for toxic debts had increased certainty over their balance sheets.

RBS was the leading blue-chip stock, up more than 12% or 4p to 36.7p, closely followed by Lloyds, up 6p to 101.6p, after HSBC lifted its target price on the pair. Barclays, also marked up by HSBC, gained 11.25p to 243.75p.

Investors returned to stocks set back by swine flu concerns in recent sessions. BA added 6.4p to 149.7p, or 4%, while travel firms Thomas Cook and TUI Travel gained 3.75p to 269.5p and 5.25p to 258.5p respectively.

Drugs firm GlaxoSmithKline, which previously advanced on hopes of increased demand for its Relenza product, eased back 2p to 1046p today.

Retail shares were also on the back foot led by Argos owner Home Retail Group. The firm shed 10.25p to 259.75p after full-year profits fell by almost a quarter and it said it expected further margin pressure this year.

Tesco was down 8.9p to 339p after figures yesterday afternoon showed another fall in its market share, down to 30.6% and 0.5% below a year ago.

Royal Dutch Shell shares were 2p higher at 1512p after the oil major reported better-than-expected first quarter results, although the haul of £2.2bn (€2.45bn) was still 58% lower than a year earlier.

Rival BP was 2.25p down at 481.25p following its own results on Tuesday.