Little overall movement for FTSE

The rally on London’s FTSE 100 Index ground to an abrupt halt today as investors rushed to secure profits amid more gloomy news on banks after their recent bull run.

The Footsie initially brushed aside a poor update from Lloyds Banking Group and an unexpected move by the Bank of England to increase its quantitative easing programme by £50bn (€56bn).

However, stocks tumbled after trading opened on Wall Street, dragging the top tier from a gain of more than 100 points – above the 4500 mark at one stage – to close up 2.2 points at 4398.7.

The overnight release of results of the US bank stress tests played on investor minds and led to profit-taking on both sides of the Atlantic.

America’s Dow Jones Industrial Average fell more than 1% in early trading, despite further encouraging signs on the US economy.

Aside from the stock market plunge, the pound also lost some of its recent gains, easing by more than 1.5% against the euro and 0.7% against the US dollar as the Bank of England effectively said it was printing more money to combat the recession.

An unscheduled report on first quarter trading from Lloyds added to a dramatic day in the City.

The recovery among many major bank stocks was reversed after Lloyds cautioned over a “significant” rise in impairments due to the impact of recession on its loan book.

It also reiterated its warning that it expected to make a loss this year.

Shares in the group fell 14%, or 16.2p to 97p.

Barclays also issued a trading update, but the group’s 15% rise in first quarter profits to £1.37bn (€1.5bn) were overshadowed by the Lloyds disappointment.

Shares fell 12.25p to 275.75p.

HSBC was 16p higher at 555p ahead of its trading statement on Monday, although part-nationalised bank, Royal Bank of Scotland, was down 4.1p at 41.6p. It is due to update investors tomorrow.

One of the best blue-chip performances of the session came from consumer products group Unilever, up 10% or 129p to 1443p after higher prices helped the Dove soap to Lipton tea group to post better-than-expected sales growth of 4.8% in the first quarter of 2009.

Guinness-to-Smirnoff drinks giant Diageo also cheered markets after holding firm on profit guidance despite weakening global markets and a 7% fall in underlying sales. Shares were up 3% or 26.5p to 881p.

Legal & General led a continued bounce back from the insurance sector as the strong equity markets provide a boost to capital strength.

L&G rose by 6.5p to 71.9p and Prudential added 15.75p to 441.75.

Outside the top flight, housebuilder Bovis Homes failed to hold on to an initial rally after it revealed a strong sales performance and said it had more than halved debt to under £50m (€56m) at the end of April. Shares fell 1% or 4p to 450.75p.

The biggest Footsie risers were Legal & General up 6.5p at 71.9p, Unilever ahead 129p at 1443p, Kazakhmys up 53p at 716.5p and Liberty International up 24.75p at 439.75p.

The biggest Footsie fallers were Lloyds Banking Group down 16.2p at 97p, Royal Bank of Scotland off 4.1p at 41.6p, Next down 108p at 1532p and Rexam off 21.5p at 305.25p.